New Delhi: Union finance minister Nirmala Sitharaman’s move to remove basic customs duties on flat panel displays, open-cell display components, and components of mobile phone circuit boards, camera modules and sensors, will help component suppliers enter India and localize their operations, said Union minister for information technology Ashwini Vaishnaw.
This, in turn, will attract more stakeholders of the global electronics component supply chain to India, he said.
“The duty rationalization addresses three of the biggest issues in the electronics component ecosystem—warehousing, the issue with custom duty structure rising out of so many different duty slabs, and challenges with supply chain vendors setting up permanent establishments,” Vaishnaw said at a post-budget press conference in Delhi on Saturday. “Today’s announcements have ensured the removal of eight duty slabs to simplify the structure, which will draw more component supply chain stakeholders to India.”
To be sure, the Centre exempted key components required in manufacturing display panels, mobile phone batteries, cameras, sensors and even the core circuit board underpinning smartphones. Duties imposed on circuit boards, camera modules, connectors, sensors and other related components were exempted from 2.5% before.
Components required in the manufacturing of open cells were also exempted from 2.5% before. However, the import duty on manufactured open cells from abroad, which is used in the manufacturing of television and other display panels, is still at 5%—down from 15% and 10% above.
In other sectors too, import duties have been exempted fully—such as in the manufacturing of components required for satellites and rocket launch vehicles.
Meanwhile, customs duties of varying levels for 28 capital goods and machinery used in the manufacturing of lithium-ion batteries, which power smartphones around the world, have also been fully exempted.
The moves come as the Centre pushes for greater localization of electronics components, in a bid to increase India’s role as a low-value addition electronics assembler, to a high-value end-to-end manufacturer of components.
Industry stakeholders largely welcomed the Centre’s move to reduce component duties.
Sunil Vachani, chairman of the ₹90,000-crore Dixon Technologies Ltd, said that the move “eliminates the previous inverted duty structure, thereby incentivizing domestic manufacturing.”
“The interactive flat-panel display (IFPD) market in India is valued at approximately ₹7,000 crore. In line with this shift, Dixon has established an IFPD assembly unit in Tirupati with an investment of ₹100 crore. The budget also encourages deeper investments in mobiles and consumer electronics,” Vachani added.
“The reduction of customs duty on open-cell parts, while maintaining a 5% duty on open cells, will further drive local production of display modules for LED televisions. Dixon is investing ₹250 crore in setting up a state-of-the-art display module plant, with operations expected to commence by December 2025.”
India’s push for value addition also includes semiconductors, for which Vaishnaw said that a second tranche of incentives under the India Semiconductor Mission will come soon.
“Incentives under the semiconductor mission have nothing to do with the central budget outlay. That scheme is being prepared, and will be put out in public as soon as it receives cabinet approval. Five chip facilities are being manufactured at this very moment, and the first made in India semiconductor chip will roll out of an Indian fab within this year,” the minister said.
Vaishnaw further told Mint that the announcement of 10,000 fellowships to be granted through the Indian Institutes of Technology (IITs) will fall under the ambit of the Anusandhan National Research Fund (ANRF). The latter, to be sure, offers a net funding outlay of $5.8 billion to incentivize and fund research and development (R&D) in core technologies across India.
This also includes a direct investment of $1.6 billion from the Centre, in order to develop capability of core intellectual properties (IPs) in India.
Further touching upon the Centre’s call to set-up a framework for drawing global capability centres (GCCs) to tier-II cities, Vaishnaw said that the Centre will work alongside states to strategically establish businesses in these venues. “The Centre as a standalone hub is not going to be building these GCCs—each state is working on their own policy, including Odisha’s opening of a new GCC hub in the state late last month,” the minister said.
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