Why Imported Phones May Become Cheaper After Union Budget

Finance Minister Nirmala Sitharaman has slashed customs duty on mobile phones and their components, a move that could see a reduction in prices of imported handsets. The announcement came as a part of the Union Budget for fiscal year 2024-25 on Tuesday.

"In the interest of consumers, I now propose to reduce the BCD (basic customs duty) on mobile phones, mobile PCBA and mobile chargers to 15 per cent," she said. Earlier it was 20 per cent. The reduction is expected to benefit companies like Apple, which imports high-end iPhone Pro models.

Industry experts believe that the move could lead to a reduction of Rs 2,000-4,000 in the prices of premium handsets like iPhone Pro and Google Pixel. The reduced customs duty will benefit companies that import completely built units (CBU) or populated PCBA (printed circuit board assembly) or chargers.

Apple, which imports Pro series models, is expected to be a prime beneficiary of the reduced customs duty. They are expected to save around $35-50 million (Rs 250-418 crore) due to the revised taxes.

According to Neil Shah, VP for Research at Counterpoint Research, the 5% reduction in customs duty will allow Apple to either pass on the benefits to consumers or channels. "The 5% duty savings will benefit vendors who import phones from Apple, especially Pro series models, as well as newer vendors like Honor, Google or OnePlus who import premium devices at launch," Mr Shah said. 

The move is seen as a boost to the Indian mobile phone industry, which has matured significantly over the last six years with a three-fold increase in domestic production and a 100-fold jump in exports.

Industry experts also believe the move could lead to rationalisation of prices in the 5G phone segment, particularly in the value-for-money segment of Rs 7,000-24,000.

The reduction in customs duty is part of a series of measures announced by the finance minister to boost the Indian economy. Other measures include a reduction in customs duty on gold, silver, leather goods and seafood, and an increase in customs duty on ammonium nitrate and non-biodegradable plastics.