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.
