Union Budget 2022 | Rationalisation of Customs duty rates to boost domestic electronic manufacturing: Finance Minister

Union Finance Minister Nirmala Sitharaman on Tuesday announced the rationalisation of the Customs duty rates for certain components to facilitate domestic manufacturing of high-growth electronic goods, wearable devices, and electronic smart meters.

“Electronic manufacturing has been growing rapidly. Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters,” she said in her Budget speech.

Ms. Sitharaman stated that duty concessions were also being given to parts of the transformer of mobile phone chargers and camera lens of mobile camera module and certain other items. “This will enable domestic manufacturing of high growth electronic items,” she observed.

‘Long road remains’

The India Cellular and Electronics Association (ICEA) welcomed the calibration of Customs duty for hearables and wearables and on parts of transformers of chargers, as well as lens as part of camera module. However, “a long road remains, especially for the continued high basic Customs duty of high-end mobile phones [phones with a CIF value higher than ₹20,000].”

“We emphasise that rationalisation of the BCD is essential to curb the grey market, increase revenue generation, and give a fillip to the industry,” it noted.

The ICEA has written to Ajay Prakash Swahney, Secretary, Ministry of Electronics and IT, stating that while the the BCD rationalisation on camera lens for use in manufacture of camera module from 15% to 2.5% was welcome, “we had asked for revert to the position before February 2021, because even 2.5% is completely unnecessary”.

“The nuisance tariff on 2.5% on various inputs, eg. ferrite inductors for the PCBA of chargers and inductors for the PCBA for mobiles, continue. Other parts of the camera module like actuator assembly and parts of sensor continue at 2.5%, which is again unnecessary,” it added.

Nikhil Mathur, Managing Director, India, & Head, Data Partnership & Innovation-APAC, GfK said the government’s growth-oriented goals led by the digital economy and tech-enabled developments would boost the consumer and electronics industry penetration across the country. GfK insights indicated similar positive trends as the consumer landscape was evolving in lower-tier towns. “The calibration in Custom duties for “wearable and hearable” devices will provide an impetus for higher growth in 2022…The underlying theme of ‘Atmanirbhar’ & ‘Make in India’ will undoubtedly create job opportunities, bringing a positive outlook towards domestic demand of consumer tech products in India.”

Mr. Mathur added that the industry was expecting rationalisation of GST for appliances and electronics that would have enhanced the consumption.