The Indian government has recently raised customs duties on a range of electronic goods—a move that has sent ripples across the tech industry, retail sector, and global supply chains. With the aim of boosting domestic manufacturing and reducing reliance on imports, this policy shift comes under the umbrella of the government’s flagship “Make in India” and “Atmanirbhar Bharat” initiatives.

But what does this mean for importers? Here's a comprehensive look at everything you need to know.

Why Have Customs Duties Been Increased?

A Push for Domestic Manufacturing

The rise in customs duties is part of India’s broader industrial strategy to:

• Encourage local manufacturing of electronic components and devices.

• Reduce the current account deficit by limiting non-essential imports.

• Make India a global electronics manufacturing hub.

By making imports more expensive, the government hopes to make domestically produced alternatives more competitive in terms of cost.

Which Electronic Goods Are Affected?

The following categories have seen increased Basic Customs Duty (BCD):

Consumer Electronics

• Smartphones (selected components like PCBs, camera modules)

• Television sets (especially panels larger than 32 inches)

• Air conditioners, refrigerators, and washing machines

• Laptops and tablets (some components only)

Electronic Components

• Printed Circuit Boards (PCBs)

• Display assemblies

• LED TV panels

• Lithium-ion battery packs

• Power adaptors and chargers

• Optical fiber cables

Example: Customs duty on open cell TV panels was hiked from 0% to 5%, which could increase retail TV prices by up to 3–5%.

Revised Duty Structure at a Glance

Impact on Importers and the Industry

Higher Import Costs

Increased duties translate to higher landing costs, squeezing profit margins for importers.

Retail Price Hike

Expect end-consumer prices to rise, particularly for mid-range smartphones, TVs, and laptops.

Supply Chain Adjustments

Importers may explore:

• Alternate sourcing from countries with favorable FTAs (Free Trade Agreements)

• Local value addition to minimize duty impact

• Partnerships with OEMs setting up units in India

Strategic Moves for Importers

To mitigate the impact, importers should:

✅ Review Product Classifications

Ensure correct HSN code usage to avoid paying unnecessary duties or penalties.

✅ Utilize Free Trade Agreements

Countries like Vietnam, Thailand, and South Korea offer FTA benefits that may reduce or eliminate duties under certain conditions.

✅ Reassess Pricing Strategies

Factor in the increased duty while setting new wholesale and retail prices.

✅ Engage in Local Manufacturing or Assembly

Taking advantage of schemes like:

• PLI (Production-Linked Incentive)

• EMC (Electronics Manufacturing Cluster) Scheme

• MEIS/RODTEP export benefits

✅ Use Bonded Warehousing

Government Schemes to Support Importers-Turned-Manufacturers

The following schemes provide financial and infrastructure support for shifting to local manufacturing:

• PLI Scheme for electronics

• Modified Special Incentive Package Scheme (M-SIPS)

• Electronic Development Fund (EDF)

• Startup India support for electronics startups

These schemes offer capital subsidies, tax breaks, and infrastructure support.

What to Watch Going Forward

📌 Regular CBIC Notifications

Stay updated with notifications from the Central Board of Indirect Taxes and Customs (CBIC) for rate changes or exemptions.

📌 Customs Compliance Audits

Expect more stringent checks and audits post-import, especially for misclassification or undervaluation.

📌 Policy Shifts Around EV Components

With the surge in EV demand, components like batteries, BMS, and motors could also see duty hikes or changes.

Conclusion: Adaptation Is Key

The raised customs duties on electronic goods mark a turning point for India’s electronics importers. While the immediate impact may involve higher costs and operational hurdles, the long-term vision is geared toward a self-reliant electronics ecosystem.

Importers must act swiftly—reassess their strategies, optimize sourcing and compliance processes, and consider participating in India’s growing manufacturing landscape.

Need Help Navigating the Changes?

If you’re an importer unsure how these changes affect your business or need guidance on compliance, sourcing alternatives, or setting up local operations, feel free to reach out to TAXAJ.

Created & Posted by Sony Garg

Accounts & Finance Executive at TAXAJ

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