India Expands Electronics Manufacturing with Customs Duty Concessions

Synopsis

India is expanding electronics manufacturing by offering customs duty concessions on machinery. These incentives aim to attract investment in critical components and advanced equipment. The government seeks to deepen the domestic electronics ecosystem beyond final product assembly. This policy supports the growth of India's electronics production and export capabilities. New Delhi is positioning India as a comprehensive electronics manufacturing hub.

India's electronics ambitions are entering a new phase. Having emerged as one of the world's largest smartphone manufacturing hubs, India is now shifting its focus towards strengthening the electronics value chain through greater domestic production of components and capital equipment.

To that end, the Centre has expanded customs duty concessions on a range of machinery and components used in electronics manufacturing—including lithium-ion batteries, display modules and smartphone components—until March 31, 2029.

The exemption, which comes into effect immediately, is expected to lower the cost of importing specialised equipment that is not widely manufactured in India, making fresh investments in advanced electronics manufacturing more attractive.

Also Read: Govt extends duty relief for electronics, lithium-ion battery manufacturing till 2029

The move marks the government's latest effort to move beyond assembling finished products and increase domestic value addition, which currently stands at around 18-20%, according to government estimates. Policymakers are increasingly focusing on localising the broader electronics supply chain by encouraging investments in critical components, capital equipment and battery manufacturing.

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Lowering costs to attract investment

The biggest change relates to lithium-ion battery manufacturing. The government has substantially expanded the list of machinery eligible for concessional customs duty by replacing the earlier entries under an existing exemption notification with a new list covering 85 categories of equipment, including machines used across the battery manufacturing process—from material mixing, coating and pressing to winding, stacking, electrolyte filling, testing and packaging. The revised list also covers supporting systems such as solvent recovery, heat recovery, dust collection and effluent treatment.

In a separate notification, the government extended customs duty relief to five key components used in the manufacture of display assemblies for automotive, medical and industrial applications, including display cells, flexible printed circuit assemblies (FPCAs), backlight units, frames and anisotropic conductive film (ACF). The exemption does not cover display assemblies used in mobile phones, smartwatches, televisions, smart meters or interactive flat-panel displays.

The Centre has also granted customs duty concessions on six components used to manufacture inductor coil modules for wireless charging in mobile phones. The CBIC has separately issued technical definitions for these components to ensure uniform implementation of the exemptions.

Building the next phase of electronics manufacturing

The policy builds on the government's broader manufacturing strategy, which has relied on production-linked incentives and targeted sectoral schemes to attract electronics manufacturers to India. According to government data, electronics production has grown from around Rs 1.9 lakh crore in 2014-15 to nearly Rs 12 lakh crore in 2024-25, while exports have increased more than eight-fold to about Rs 3.3 lakh crore over the same period.

India is now the world's second-largest mobile phone manufacturer, with more than 300 manufacturing units in operation. Smartphones emerged as the country's top export commodity in calendar year 2025, reflecting India's growing role in global electronics supply chains.

Also Read: Indian electronics manufacturers forge more and more partnerships with companies from South Korea, Taiwan, Japan

The latest duty concessions also complement the Electronics Component Manufacturing Scheme (ECMS), which seeks to attract investments into critical components such as printed circuit boards, camera modules, optical components and capital equipment. The scheme has received investment commitments of over Rs 1.15 lakh crore—nearly double its original target—highlighting strong industry interest in expanding manufacturing capacity in India.

By lowering the cost of importing sophisticated manufacturing equipment while pushing for greater localisation of components, the government is seeking to position India not just as an assembly base for global brands, but as a comprehensive electronics manufacturing hub integrated into global supply chains.