The Union Budget 2022 presented today mentioned a cut in the customs duty on the parts which are being used in the manufacturing of a smartphone and its related ecosystem. Finance Minister Nirmala Sitharaman in her Budget speech said that it will boost the local manufacturing of electronics items. The FM said that domestic manufacturing of wearable and hearable devices will get boosted by it. Duty concessions were also announced on parts of phone chargers and phone camera modules.
The calibrated rates may bring some respite to the makers of these items and it is expected to get passed on to the buyers. But, we have to wait for it. The duty rebate on the parts chargers and camera module is also expected to save some money for the OEMs.
“The reduction of basic customs duty is a good step at this juncture, as globally supply chain has seen increasing trend in pricing of few components like chipsets, display, etc. This reduction will help OEMs contain the cost by absorbing frequent price hikes due to volatility in the supply chain. The net impact is that the prices of the devices might not change for consumers,” Faisal Kawoosa, founder and chief analyst at Techarc said.
The benefits can be more practical if these parts are being manufactured in India and not sourced. Nonetheless, the concessions announced might give some air to makers and buyers.
“Electronic manufacturing has been growing rapidly. Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters. Duty concessions are also being given to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items. This will enable domestic manufacturing of high growth electronic items,” said Sitharaman.
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