Union Finance Minister Nirmala Sitharaman announced a customs duty cut on mobile phones and chargers in her Union Budget 2024 presentation. This will benefit both customers and businesses. For customers, the prices of mobile phones and chargers could decrease. As for the market, it could benefit local and foreign players. Let’s see how.
Cheaper phones and chargers: Union Budget 2024
“Tariffs are becoming a hurdle,” said Ms. Sitharaman. She added, “We need to shift tariff policy to suit our new ambitions. Exports, not domestic”. The Narendra Modi government acknowledges customs duty is making phones (and chargers) costly for consumers and companies.
So, in the 2024 budget, the government is slashing the basic customs duty on imported phones and phone chargers to 15 percent from the previous 20 percent tax.
The Finance Minister said, “For customs, we reduced the number of customs duty rates in 2022-23. I propose to rationalise them after a review over next six month“.
The centre has come to this decision after some deliberation:
- The Finance Minister notes there has been a “three-fold increase in domestic production over the last six years,” and “the Indian industry has matured“.
- The previous Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar had raised related concerns in a letter to the Finance Minister dated January 3rd, 2024. In it, he said, “India has high production cost due to highest tariffs amongst key manufacturing destinations. The geopolitical realignment is forcing supply chains to shift out of China … We must act now, or they will shift to Vietnam, Mexico and Thailand“.
The same concern was echoed by the US Ambassador Eric Garcetti, who remarked, “If you tax inputs … you’re not protecting a market. What you are doing is limiting a market”.
Economic benefits of lower customs duty on phones, chargers
- Lower taxes could result in lower prices of phones and phone chargers for consumers.
- This also shows the Modi government’s intentions to attract foreign manufacturers and to aid domestic phone (and charger) makers.
- Lower prices could lead to higher demand and help businesses sell and earn more.
- Lower customs duty could result in lower production costs for businesses, both local and foreign players in India. This could also lead to more competition and job creation in the market.
