While accelerating towards manufacturing modern semiconductor technologies, India has achieved another milestone by reducing the Basic Custom Duty (BCD) to 0% on 85 categories of electronics components and manufacturing equipment by issuing three official notifications through the Finance Ministry and the Central Board of Indirect Taxes and Customs (CBIC). This policy removes the previous 5% to 7.5% import taxes to make it cheaper to manufacture electronics inside the country. It also simplifies supply chains by lowering landed costs, which boosts local component sourcing and accelerates the country’s ambition of becoming a global electronics and manufacturing hub.
The duty exemption primarily covers components, machinery, and equipment that are not manufactured in sufficient quantities within India but are essential for the production of smartphones, laptops, consumer electronics, telecom equipment, industrial electronics, automotive electronics, and semiconductor-related products. This elimination of costs on import duties in semiconductor manufacturing lowers production costs, making electronics cheaper to build, and attracting global investments by lowering their global supply chain expenses.
Industry experts believe that reduction in import duty will practically benefit manufacturers by directly lowering production costs. Manufacturing electronic products that rely on advanced electronic components, precision manufacturing equipment, semiconductor materials, and testing systems that are currently unavailable or produced only in limited quantities will be able to source these critical inputs at lower costs.
Combined with ongoing investments under the India Semiconductor Mission, PLI schemes, and expanding semiconductor manufacturing projects, the cost-cutting of import duties is expected to strengthen India’s position as a preferred destination for electronics production and innovation. As the semiconductor market grows, the zero-duty policy on electronics input is expected to improve export competitiveness and the development of a resilient semiconductor ecosystem, supporting India’s emergence as a key player in the global semiconductor industry.
