Union Budget 2025 Cuts Customs Duty on Electronics, Making Smartphones and TVs More Affordable
In a major move to boost domestic manufacturing and make electronics more affordable for consumers, Finance Minister Nirmala Sitharaman announced a reduction in the basic customs duty (BCD) on key electronics components in the Union Budget 2025-26. This is expected to have a direct impact on the pricing of smartphones and televisions, with a special focus on making imported gadgets more cost-effective.
The budget proposals include cutting the customs duty on mobile phones, mobile phone chargers, and printed circuit board assemblies (PCBAs) from 20% to 15%. This change is particularly significant for smartphones, including high-end models like the iPhone, which are not yet manufactured locally and rely heavily on imports for their components.
Key Changes in Customs Duty: Impact on Imported Gadgets
The reduction in the basic customs duty on essential mobile phone components is expected to lead to a decrease in the cost of smartphones and related accessories, especially those that are imported into India. This change reverses a previous move in 2018, when the government increased the duty from 15% to 20% in a bid to encourage local manufacturing. The 2025 budget’s reversal reflects the government’s evolving strategy to balance both local production incentives and consumer affordability.
Industry leaders have welcomed this move, calling it a positive step for India’s electronics ecosystem. Muralikrishnan B, President of Xiaomi India, emphasized that the duty cut would benefit both consumers and manufacturers. By reducing the costs of mobile phone chargers and PCBA (key components in smartphones), this policy shift will improve the domestic production environment, facilitating greater investment and innovation in India’s smartphone manufacturing sector.
Similarly, Arijeet Talapatra, CEO of Transsion India, praised the duty reduction, noting that it would help make smartphones more affordable in India’s growing market. The country’s demand for smartphones has been on the rise, and any steps to reduce costs will likely contribute to greater market penetration and accessibility.
Potential Price Drop: How Much Will Consumers Benefit?
While the reduction in customs duty is expected to lower manufacturing costs, experts caution that it may not result in a drastic reduction in retail prices. Tarun Pathak, Research Director at Counterpoint Research, explained that the expected drop in smartphone prices could be marginal—likely between 1-2%. However, the actual price reduction will depend on the pricing strategies of individual manufacturers and the types of smartphones in question.
Budget smartphones, which already operate on thin profit margins, may not see a significant price drop, as manufacturers may choose to absorb the savings to offset other rising production costs. However, consumers could still see some level of price reduction on higher-end models, especially those imported from countries like China, where components are sourced.
Despite these cautious predictions, the general consensus is that the duty reduction will lead to more affordable gadgets in the long term, especially for consumers purchasing imported smartphones that are not yet locally manufactured.
The Government’s Focus on Boosting Local Electronics Manufacturing
Beyond the customs duty cuts, the Union Budget 2025 also includes initiatives aimed at promoting local electronics manufacturing. The government plans to introduce upskilling programs and training initiatives for the workforce, helping to develop a skilled labor force to support the electronics manufacturing sector. This focus on skill development aligns with the government’s broader vision of making India a global hub for electronics production.
In 2023, the government had already taken similar steps by eliminating the customs duty on camera lenses used in smartphones, which helped reduce the production cost for manufacturers. Such steps underscore the government’s commitment to creating a more cost-competitive environment for local electronics manufacturing.
Previous Similar Measures and Industry Reactions
The 2025 duty reduction is not the first time the government has intervened to support the electronics industry. In the past, customs duty exemptions and incentives for local production have led to significant growth in India’s electronics manufacturing sector. However, despite these incentives, India still faces challenges in becoming fully self-reliant in electronics production. Much of the country’s demand for smartphones and televisions is still met through imports, especially for high-end products.
The latest changes in customs duty are seen as an important step toward achieving a more balanced electronics supply chain in India. While it may take time for the full impact to be felt in retail pricing, these measures are expected to encourage local innovation, reduce dependency on imports, and make gadgets more affordable for Indian consumers.
Looking Ahead: What Can Consumers Expect?
While consumers may not see a dramatic price drop in the immediate future, the government’s focus on reducing imported electronics prices and incentivizing local production is expected to have long-term benefits. As more manufacturers shift their operations to India and tap into the local supply chain, the overall cost of gadgets like smartphones and televisions may decrease, making technology more accessible to a broader segment of the population.
Consumers will also benefit from improved competition in the local market as more brands set up shop in India, driving prices down through increased availability and localized production.
Conclusion: A Step Toward Affordable Electronics for All
The reduction in customs duties announced in the Union Budget 2025 represents a significant step toward making smartphones, televisions, and other consumer electronics more affordable for the Indian public. While price reductions may be modest initially, the long-term benefits of the policy shift are clear: lower costs, stronger local manufacturing, and a more competitive electronics market.
The budget’s dual focus on incentivizing domestic production and making imported gadgets cheaper is expected to enhance India’s electronics ecosystem and contribute to the country’s economic growth.