Budget 2026: ICEA pushes tariff reset for mobile components

Ahead of the Union Budget 2026–27, the India Cellular and Electronics Association (ICEA) has submitted a set of recommendations focused on customs duty rationalisation, correction of inverted duty structures, and operational reforms affecting electronics manufacturing. The proposals aim to improve cost competitiveness, encourage local value addition, and address long-standing classification and procedural issues.

Duty Rationalisation for Mobile Phone Components

ICEA has sought a reduction in Basic Customs Duty (BCD) on microphone, receiver and speaker assemblies used in mobile phones from 15% to 10% under HSN 85177990 and 85182990. Although these components account for only around 1% of a handset’s bill of materials, ICEA argues that higher duties add to the final cost of devices and place India at a disadvantage compared with competing manufacturing locations.

The association has also recommended reducing BCD on printed circuit board assemblies (PCBAs) and flexible printed circuit assemblies (FPCAs) from 15% to 10%. It noted that nearly all PCBAs required for mobile phones are already produced domestically, while a significant portion of FPCA imports are used for exports. ICEA said a duty cut would have minimal revenue impact while improving tariff consistency, reducing cascading costs, and discouraging price distortions at the sub-assembly level.

Hearables, Wearables, and Tariff Alignment

For hearables and wearables, ICEA has proposed lowering the BCD on finished products from 20% to 15%, aligning them with India’s broader tariff rationalisation framework. It said the reduction would support affordability and scale in a fast-growing segment without undermining domestic manufacturing.

The association has also flagged inconsistencies in duties on mechanical parts and enclosures for hearables and wearables, which currently attract 15% BCD compared with 10% for similar mobile phone components. ICEA has recommended aligning these rates at 10% to ensure predictability and support investment in tooling, moulding and precision manufacturing.

Addressing Inverted Duty Structures

ICEA has highlighted several instances of inverted duty structures that discourage domestic manufacturing. One such case involves display assemblies used in automobile infotainment systems, medical devices and industrial electronics, where both finished assemblies and key inputs attract 15% BCD.

The association has proposed a calibrated tariff structure with 15% duty on finished display assemblies and nil duty on inputs and sub-parts, excluding mobile phones and wearables. It said this would align display manufacturing across electronics verticals and support scale under the Electronics Components and Manufacturing Scheme (ECMS).

A similar concern has been raised for inductor coil modules used in wireless charging for smartphones. While the finished module attracts 10% BCD, parts and inputs face duties of up to 15%. ICEA has recommended reducing duties on these inputs to zero to ensure a sufficient duty differential and make domestic assembly viable.

Capital Goods and Localisation Challenges

ICEA has also called for the correction of inverted duties affecting capital equipment used in mobile phone manufacturing. Finished machinery is largely exempt from customs duty, but components and sub-assemblies required to manufacture such equipment domestically attract duties ranging from 5% to 20%.

The association warned that this structure incentivises the import of fully built machines rather than local production, thereby limiting technological capability. It has recommended to extend zero-duty treatment to all components and sub-assemblies used in the manufacture of capital goods for mobile phones.

In addition, ICEA has sought inclusion of certain specialised machinery for mobile phones and lithium-ion cell manufacturing under existing duty exemption notifications, citing rising supply-chain risks and the need to build self-reliant capacity.

Classification and Procedural Reforms

On classification, ICEA has urged uniform treatment of display assemblies across end uses under HSN 8524, arguing that such products derive their essential character as display devices rather than as vehicle or industrial parts. It has also sought a clarification classifying Bridge Diode Rectifiers under HSN 8541, in line with global practice and existing customs rulings.

The association has further proposed a separate tariff sub-heading for Interactive Flat Panel Displays (IFPDs), recommending HSN 85285910 to distinguish them from conventional monitors and reduce interpretational disputes.

MOOWR-Related Operational Issues

ICEA has raised several operational concerns affecting units operating under the Manufacture and Other Operations in Warehouse Regulations (MOOWR). These include the absence of depreciation benefits when capital goods are cleared into the domestic tariff area, incorrect levy of interest during debonding, and exclusion of MOOWR units from RoDTEP benefits.

Other recommendations include creating a digital platform for MOOWR-to-MOOWR transfers, allowing a single ex-bond bill of entry for multiple in-bond consignments, removing the requirement for space certificates during certain transfers, and granting deemed AEO Tier-1 status to MOOWR units.

Finally, ICEA has proposed fixing a uniform wastage norm of up to 2% for mobile phone and component manufacturing, citing international benchmarks and the absence of a standard framework for assessing routine production losses.