In a significant move to enhance smartphone production, India has decided to reduce import taxes on various mobile device components. The tariff cuts, announced by Prime Minister Narendra Modi’s government, cover items such as plastic and metal mechanical parts, SIM sockets, and screws. This development is anticipated to provide a considerable advantage to companies, including Apple Inc., eyeing India as a key global manufacturing hub.
India’s push to become an electronics manufacturing powerhouse is gaining momentum, with the government actively attracting global brands like Apple to shift their manufacturing base from China. The objective is not only to increase assembly operations in India but also to establish a robust ecosystem of local suppliers, ensuring a more comprehensive role in the electronics value chain.
Pankaj Mohindroo, Chairman of India Cellular and Electronics Association, hailed the government’s decision as a crucial step towards enhancing mobile manufacturing competitiveness in India. He emphasized the importance of building scale and leveraging low input tariffs to transform India into a global hub for electronics manufacturing and exports.
The recent tariff reductions are seen as a response to concerns raised by industry stakeholders, including Apple, Foxconn Technology Group, Pegatron Corp., and Dixon Technologies India Ltd., about higher duties negatively impacting India’s cost competitiveness. Last month, the lobby group highlighted that increased duties could dent India’s competitiveness by up to 7%.
India’s efforts to entice global manufacturers have seen success, with Apple already increasing its production in the country. Presently, India contributes over 7% to the global production of iPhones. As tensions between major economies persist, Apple is exploring strategies to reduce reliance on China, prompting its manufacturing partners to establish additional assembly lines in India.
The reduction in import tariffs is expected to make assembly operations more cost-effective, encouraging manufacturers to consider India for both domestic consumption and export. India’s smartphone exports witnessed a twofold increase in the fiscal year through March 2023, reaching approximately $11 billion.
Industry analysts anticipate that the scale created by these developments will strengthen India’s ambition to become the “factory of the world” by enticing more component makers to establish local manufacturing facilities.
By Bloomberg
