Budget 2026: Electronics industry advocates for duty and tariff revisions
What's the story
The Indian Cellular and Electronics Association (ICEA) has recommended a major overhaul of tariffs in the Union Budget for the year 2026-27. The body represents India's electronics manufacturing sector, which is crucial for the country's goal of becoming a global electronics hub. ICEA's pre-Budget memorandum calls for rationalizing Basic Customs Duty (BCD) on mobile phone components, wearables, display assemblies, and capital goods.
Tariff adjustments
Duty reduction for wearables and hearables proposed
ICEA has proposed reducing the duty on finished products in the fast-growing segments of wearables and hearables from 20% to 15%. The move is aimed at aligning with India's tariff roadmap. The association has also suggested lowering the duty on mechanical parts used in wearables from 15% to 10%, bringing them in line with mobile phone components.
Duty concerns
ICEA addresses inverted duty structure on display assemblies
ICEA has raised concerns over the inverted duty structure on display assemblies used in automobiles, medical devices, and industrial electronics. Both finished displays and critical inputs currently attract a 15% duty, which doesn't encourage domestic value addition. The association has suggested keeping the 15% levy on finished assemblies while scrapping duties on inputs and sub-parts to zero, similar to mobile phones and televisions.
Component tariffs
Duty changes for advanced components
ICEA has also flagged issues with advanced components such as inductor coil modules for wireless charging in smartphones. Here, inputs attract higher duties than the finished module. The association has suggested scrapping duties on parts while keeping the existing 10% levy on the final product to promote local manufacturing. This is part of their larger push for tariff rationalization across various sectors within electronics manufacturing.
Capital goods
Calls for zero-duty benefits on capital goods
ICEA has also called for zero-duty benefits on all components and sub-assemblies used in capital equipment manufacturing. This is to promote local production. Currently, fully built equipment for mobile phone manufacturing often attracts zero duty, but components needed to produce such machinery domestically face tariffs of up to 20%. The association has also sought uniform customs classification of display assemblies under HSN 8524, regardless of end use, to reduce disputes.
Tariff classification
Separate tariff line for IFPDs
ICEA has also sought a separate tariff line for Interactive Flat Panel Displays (IFPDs), arguing that their current classification with conventional monitors doesn't reflect technological differences. On the operational side, ICEA has recommended allowing depreciation on capital goods cleared into the domestic market under Manufacturing and Other Operations in Warehouse Regulations (MOOWR).