Government Cuts Customs Duty on Electronics Manufacturing Inputs
The Center has reduced import expenses for various components and capital goods utilized in electronics and battery production by releasing three customs notifications that offer basic customs duty (BCD) exemptions on certain inputs and machinery.
The notifications, released on July 8, prolong duty exemptions for parts utilized in display assemblies and wireless charging modules, while broadening the range of machinery qualified for reduced duty for lithium-ion cell production.
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The initiative seeks to enhance cost competitiveness and foster local value creation in electronics and electric mobility.
As per a notification, the government has excluded five components utilized in the production of display assemblies for automotive, medical, and industrial purposes from BCD until March 31, 2029. These encompass cells, flexible printed circuit assemblies (FPCAs), backlight units, frames, and anisotropic conductive film (ACF).
The exemption, nonetheless, excludes display assemblies for mobile phones, smartwatches, smart meters, television screens, and interactive flat-panel displays.
In a different announcement, the Center has prolonged the zero customs duty until March 31, 2029, on six components utilized in the production of inductor coil modules for wireless charging in mobile phones. These consist of nano-crystalline structures, E-shields, PET liners, PC shims, stranded and NFC coils, along with neodymium-iron-boron (NdFeB) magnets.
The government has released a third notification that updates the current list of machinery qualified for reduced customs duty for lithium-ion cell production, now featuring an expanded list of 85 capital goods.
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The updated list features coating machines, winding machines, welding systems, testing devices, formation machines, drying systems, and various specialized manufacturing tools employed in the lithium-ion cell production process.
"The Government's decision to grant BCD exemptions on key inputs used in the manufacture of display assemblies, wireless charging modules and lithium-ion cells is another significant step towards strengthening India's electronics manufacturing ecosystem," says Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat.
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"By reducing the import cost of critical components and capital goods, these measures are expected to improve cost competitiveness, encourage greater domestic value addition, and support the localisation of high-value manufacturing in smartphones and other electronic products. The expanded list of exempted capital goods for lithium-ion cell manufacturing is also likely to accelerate investments in domestic battery manufacturing," he adds.