Duty cut on smartphone parts to hit electronics ecosystem, trigger job loss: GTRI

GTRI warns against reducing smartphone parts tariffs in India, citing harm to local ecosystem, investment, and job losses.

Any reduction in the customs duty on smartphone parts in the forthcoming budget will harm India's developing component ecosystem, discourage investment, increase imports, and make local firms uncompetitive, potentially resulting in job losses, think tank GTRI said on Tuesday (January 7, 2025).

India's smartphone industry is a 'Make in India' success story, with 2023-24 production reaching $49.2 billion and exports at $15.6 billion, making smartphones the fourth-largest export after diesel, aviation fuel, and polished diamonds.

However, a few industry groups are pushing for further import tariff cuts on smartphone components in the Union Budget for FY26.

The Global Trade Research Initiative (GTRI) warns that this could harm India's growing local manufacturing ecosystem and long-term ambitions in electronics.

"Instead of cutting tariffs, GTRI recommends setting up component hubs near ports to reduce import delays and warehousing costs. This approach, used by countries like Vietnam and China, would support local manufacturing and reduce import dependency," the think tank's founder Ajay Srivastava said.

Highlighting six key risks of reducing tariffs, he said any reduction would harm India's developing component ecosystem, discourage investment, and hurt the goal of self-reliance; and would not help pushing exports as current export schemes already allow duty-free imports for manufacturing exports.

He added that the country's success in smartphone manufacturing stems from policies promoting local production through tariffs, incentives, and phased programmes and cutting tariffs could weaken this framework.