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Budget 2023: Custom-Duty Tweaks To Boost Electronics Manufacturing

The move will help to increase the domestic value addition and growth of the sector.

<div class="paragraphs"><p>Workers at mobile phone parts assembly line at Dixon Technologies Ltd. (Source: company website) </p></div>
Workers at mobile phone parts assembly line at Dixon Technologies Ltd. (Source: company website)

The government has given fresh impetus to the domestic electronics manufacturing sector by lowering basic customs duties on imported components like open cells of television panels, while increasing it on few finished goods, including toys.

In her budget speech in Lok Sabha on Wednesday, Finance Minister Nirmala Sitharaman said the customs duty on camera lens and its inputs or parts for use in the manufacture of camera module of cellular mobile phone will be reduced to zero and will continue the concessional duty on lithium-ion cells for another year to boost local manufacturing.

Custom duties on clothes, frozen mussels and squids, asafoetida, cocoa beans, methyl alcohol, acetic acid, cut and polished diamonds, chemicals needed for petroleum products, denatured ethyl alcohol used in chemical industry and steel scrap have been reduced and eventually. These items will get cheaper.

Additionally, the customs duties on open cells of LED TV panels will be halved to 2.5%, according to the budget announcements.

Basic customs duty on heat coil for the manufacture of electric kitchen chimneys has been reduced to 15% from 20% to push local manufacturing.

On the other hand, the budget doubled the basic customs duty on kitchen chimneys to 15%, on bicycles from 30% to 35%, and toys and parts of toys, except electronic toy parts, from 60% to 70%. It will increase the prices of the imported goods and make locally-made products cost-competitive.

Open cell panels account for 60-70% of the cost of manufacturing LED TV sets. The reduction of customs duty on parts of open cells will help to effectively lower television prices by up to Rs 3,000 on larger screens, according to Avneet Singh Marwah, CEO of Super Plastronics Pvt., the brand licensee of global brands like Thomson, Kodak and Blaupunkt.

Consumer Electronics and Appliances Manufacturers Association President Eric Braganza said this move will help to increase the domestic value addition and growth of the sector.

"This is a good step for the sector. Most of the manufacturers will extend the benefits to the consumers," he said.

Sony India Pvt. Managing Director Sunil Nayyar said: "The newly-announced reduction in basic customs duty for several television component imports is a big boost for the television industry."

He expects this budget to propel more demand and consumer spending across various sectors, especially with more disposable income in hand of consumers.

"It is encouraging to see a reduction in customs duties for inputs/parts of certain electronic items like lithium-ion batteries, TV, and camera lens," said Panasonic Life Solutions India Pvt. Chairman Manish Sharma

He added that the move will subsequently enable local manufacturing of electronics.

India went from manufacturing 60 million mobile phones in the country in 2014–15 to 310 million in 2021–22, according to the Economic Survey 2022–23.

Haier Appliances India Pvt. President Satish N S said this reduction will not only benefit the manufacturers, but will also be a lifestyle change for many consumers as they can buy televisions at an affordable rate. 

Videotex International Pvt., which owns Daiwa brand and is a manufacturer for Realme, Toshiba, Lloyd, Compaq, BPL, Hyundai and over 15 brands of India, expect LED television prices to fall by 1–1.5% and the "benefits of the same shall be passed on to the customers".

According to a Counterpoint Research report, India's smart TV market recorded a 38% growth in shipments during the July–September quarter over last year.

Indian brands showed the fastest growth, doubling their share to 22% of the total smart TV shipments. Yet global brands led India's smart TV segment with a 40% share, followed by Chinese brands with a 38% share.