Budget 2023: FM announces reduction in customs duty; smartphones, TV sets to get cheaper

Finance Minister Nirmala Sitharaman on February 1 announced the reduction in the basic customs duty rate, other than textile & agriculture, from 21 percent to 13 percent.

“As a result, there will be minor changes in the basic custom duty duties, cesses & surcharges on some items including toys, bicycles, automobiles,” Sitharaman said.

In a bid to boost the demand and penetration of smartphones, the FM announced relief in customs duty on import of certain parts and inputs of smartphones such as camera lens. Custom duty exemptions will also be provided for the manufacturing of lithium-ion batteries for another year. This will help drive the broadening of the local component ecosystem and increase domestic value addition.

This will boost demand for smartphones, especially in the mid-price segment.

According to Counterpoint, the Indian smartphone market suffered reverses in 2022. Component shortages that hit the market at the start of the year were a significant contributing element. Since rising component prices and inflation resulted in higher retail prices, this sluggish demand was particularly noticeable in the entry and mid-level price bands. The current announcement is expected to boost demand and sales of smartphones.

TV sets may get cheaper

Meanwhile, bringing cheer to the consumer durable category, FM announced the reduction of basic customs duty on open cells of TV panels to 2.5 percent. To rectify the inversion of duty structure and encourage the manufacture of electric kitchen chimneys, the import duty is being raised from 7.5 percent to 15 percent, while that on the chimneys' heat coil is being reduced from 20 percent to 15 percent.

FM Sitharaman also announced to increase taxes on cigarettes by 16 percent making them costlier for consumers. Diamond, gold and silver utensils got costlier.