Union Budget 2024: Mobile Phones and Chargers to Become Cheaper, Import Duty on Motherboards Raised

The Union Budget 2024 presented by Finance Minister Nirmala Sitharaman offered a mixed bag of measures for the electronics industry. Here's a breakdown of the key announcements:

Good News for Mobile Phone Users: Reduced Import Duties

• Mobile Phones, Chargers to Get Cheaper: A significant positive for consumers is the decrease in Basic Customs Duty (BCD) on smartphones, mobile chargers, and Printed Circuit Board Assemblies (PCBAs) used in their production from 20% to 15%.

• Expected Outcome: This reduction aims to make mobile phones and accessories more affordable, potentially leading to lower retail prices. It could also stimulate demand and accessibility of mobile technology across India.

Industry Benefits:

• Boost for Domestic Production: The move is expected to benefit domestic mobile phone manufacturers by lowering their production costs. This could lead to increased efficiency, higher profits, and potentially more investments in the local mobile phone sector.

Key Data Points:

• India's Smartphone Market Growth: According to the International Data Corporation's Worldwide Quarterly Mobile Phone Tracker, India's smartphone market witnessed an 11.5% year-over-year growth in Q1 2024, marking the third consecutive quarter of shipment increase.

Angel Tax Relief for Startups

In a separate announcement aimed at promoting entrepreneurship and innovation, the budget abolished the angel tax for all classes of investors. This long-standing industry demand is expected to attract more investments towards startups, which are crucial engines of economic growth through job creation and innovative products and services.

Increased Import Duty on Telecom Motherboards

While the mobile phone segment saw a duty cut, the government aims to boost domestic telecom gear manufacturing by increasing the BCD on motherboards by 5%, from 10% to 15%.

Offsetting Measures:

• To incentivize domestic manufacturing of telecom PCBAs, the increased duty is balanced by a duty-free provision for essential minerals like lithium, copper, and cobalt used in their production.

• The Finance Minister also proposed full duty exemptions on 25 critical minerals crucial for various industries, including telecommunication and high-tech electronics.

Conclusion

The Union Budget 2024's measures for the electronics industry prioritize affordability for consumers and growth in domestic manufacturing. The reduced import duties on smartphones and related components are likely to bring down retail prices, potentially leading to a surge in mobile phone accessibility. This, coupled with the abolishment of the angel tax, can create a stimulating environment for startups and innovation.

However, the increased import duty on telecom motherboards highlights the government's focus on promoting domestic production in specific segments. The duty-free provision for essential minerals helps balance this policy, ensuring a cost-effective environment for telecom equipment manufacturing.

Overall, Budget 2024 offers a strategic approach for the electronics industry, catering to both consumer needs and long-term manufacturing goals. The success of these measures will depend on their implementation and the industry's response to the evolving landscape.