The Central Government has taken a very important step towards making India the world’s largest electronics manufacturing hub. In order to increase the production of electronic goods within the country, eliminate dependence on foreign imports and keep the prices of products under control, the government has announced a big discount in custom duty on essential machines as well as their parts. This important relief will be applicable till 31 March 2029. The direct effect of this decision will be that it will become much cheaper to make lithium-ion batteries, display panels and wireless charging modules for smartphones in the country. When the production costs of companies will decrease, high-tech electronic products are expected to become cheaper for common consumers in the coming time.
Big preparations to end dependence on imports
The electronics market in India has grown rapidly in the last few years, but we are still dependent on foreign markets for many essential parts. This latest decision of the government is a concrete effort to break this dependence. The new concessions have been implemented with immediate effect. According to trade experts, this reduction in custom duty will provide huge economic relief to domestic manufacturing companies. This will not only strengthen India’s domestic supply chain, but will also bring new foreign investment in the high-tech manufacturing sector along with consumer electronics. Overall, this step will prove to give a new impetus to the ‘Make in India’ campaign.
Lithium-ion battery manufacturing gets a boost
In today’s era, everything from electric vehicles (EV) to big and small gadgets run on lithium-ion batteries. The biggest benefit in this policy change has been given to battery manufacturing companies only. According to the notification issued by the Central Board of Indirect Taxes and Customs (CBIC), the scope of the list of machines used in manufacturing lithium-ion batteries has been significantly expanded. Now concessional custom duty will be imposed on 85 types of machines associated with the entire production chain. These include machines ranging from battery powder preparation, slurry mixing, coating, electrode winding, laser welding to testing, inspection and final packaging. Apart from this, auxiliary machines of effluent treatment like solvent recovery, dust collection have also been kept under the scope of this exemption.
Who will benefit from tax exemption on display parts?
Display is a very important part in modern devices. The government has removed custom duty on many imported parts of display assemblies used in automobiles, medical equipment and industrial machines. Now parts like display cell, backlight unit, flexible printed circuit assembly (FPCA), frame can be imported cheaply. However, it is important for the general public to know that this special exemption will not apply to parts of mobile phones, televisions, smartwatches and interactive flat panel displays.
Wireless charging feature of smartphone will also be cheaper
Wireless charging is considered a premium feature of smartphones today. A plan has been made to prepare this cheaply in the country itself. The government has reduced the duty on all the essential parts used in the wireless charging module of smartphones. These include NFC, inductor coil, nano-crystalline assembly, e-shield, PET liner, PC shim and NdFeB magnets. To ensure that there is no confusion regarding the rules, CBIC has also issued clear technical definitions of all these parts.
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