India is considering import duty cuts on components key to producing high-end mobile phones, two government officials said, which would potentially be a boost for companies like Apple (AAPL.O) and the country's exports.
Companies in the sector have been pushing for cuts on nearly a dozen components to reduce the cost of making smartphones in India and level up the playing field with regional competitors such as China and Vietnam.
India's electronics and information technology ministry is firming up the proposal, including the size of the duty cuts, and hopes it can be included in the federal budget on Feb.1, one official said. It wasn't clear how many components are included in the ministry's proposal.
A decision on the cuts will be taken by the finance ministry when it finalises the budget, the two people said.
The sources declined to be identified given the details of the proposal, which has not been previously reported, are not public.
India's electronics ministry, the finance ministry and Apple did not respond to requests for comment.
Components such as camera parts for high-end phones feature in the proposal, the second person said.
Import duties on the mobile phone components, such as camera modules and chargers, where the industry is seeking cuts, currently range from 2.5% to 20%, according to the industry body India Cellular and Electronics Association (ICEA).
It says India's levies are the highest among six comparable manufacturing nations including China, Vietnam, Mexico, and Thailand. Unless they are lowered, India's mobile phone exports growth could slow down, it says.
Those exports doubled to $11.1 billion in the last fiscal year 2022/23 compared with the year before, according to industry figures, helped by government incentives to support local manufacturing.
The industry expects exports in the 2023/24 fiscal year to rise to $15 billion.
Mobile phone exporters in India, other than Apple, include South Korea's Samsung (005930.KS) and China-based Xiaomi (1810.HK).
Apple iPhones are currently assembled in India but the tech giant is looking to expand into iPad and AirPods production too in part to diversify its manufacturing away from China.
Last year, India's trade minister said Apple wanted to boost its manufacturing in India to 25% of its global total and a deputy minister of information technology said the company could double or triple investments in the country, along with exports, over the next few years.
In the annual budget for 2023/24, Finance Minister Nirmala Sitharaman eliminated a 2.5% customs duty on select parts of mobile camera phones to try to increase the number of high-end mobile phones assembled in India.
Separately, India's trade department is seeking import duty cuts on more than a dozen items, ranging from engineering goods to inputs for garment production, a third government official said.
The department for the promotion of industry and internal trade did not respond to a request seeking comment.
