Budget 2026 May Ease Duty Hurdles to Boost Phone Machinery Manufacturing
The Union Budget 2026 may bring important relief for India’s mobile phone manufacturing ecosystem, as the government is actively examining industry demands to fix the inverted duty structure on parts and components used in making capital equipment, The Economic Times reported quoting people privy of the matter.
The move is aimed at sustaining the strong momentum in electronics manufacturing and helping India move beyond basic assembly operations. This development has gained urgency following China’s restrictions on the export of high-end machinery, precision tools, and rare-earth-linked equipment, which have disrupted global supply chains.
Industry executives say that Chinese export curbs have forced Indian manufacturers to explore local production of critical machinery used in mobile phone manufacturing. However, this shift has exposed a major structural problem. While finished capital equipment can be imported into India at zero duty, the parts and sub-components needed to manufacture the same equipment domestically attract import duties ranging from 5% to 25%. This duty inversion makes local manufacturing more expensive and puts Indian companies at a clear cost disadvantage.
The electronics industry has flagged this issue as an “unintended inversion” that discourages value addition within the country. According to industry representatives, unless this anomaly is corrected, India risks remaining stuck in an assembly-led model rather than moving up the manufacturing value chain. Such a situation could weaken long-term competitiveness, limit job creation, and slow down investments in high-value manufacturing segments.
Industry bodies have been engaging closely with the finance ministry to seek urgent relief. The India Cellular and Electronics Association (ICEA), whose members include global and domestic players, has formally written to the revenue secretary highlighting the issue. The association has also submitted a detailed report pointing to India’s heavy import dependence and the need to build resilient domestic capabilities in capital equipment manufacturing.
Other industry groups, have also made similar representations. They have recommended zero-duty treatment for all inputs, components, parts, and sub-assemblies used in manufacturing electronics capital equipment. The industry believes that correcting the duty inversion would support the objectives of the Electronics Components Manufacturing Scheme (ECMS), encourage MSME participation, enable technology transfer, and strengthen India’s position in global electronics value chains. Expectations are high, especially since Finance Minister Nirmala Sitharaman had earlier reiterated the government’s commitment to rationalising tariffs and supporting domestic manufacturing.
Source: The Economic Times
