Budget 2025 has paved the way for India’s appearance as a global semiconductor industry powerhouse. Government has publicized several initiatives to boost the integration of electronics products with global supply chains. This will also bring huge opportunities in the industry 4.0 landscape, which requires high skills and talent. The government will support the domestic electronic industry to leverage this opportunity for the benefit of the country’s youth.
As per the research finding of Ankita Mittal, Lead Analyst at The Insight Partners, “India's semiconductor industry is expected to grow from US$ 53 billion in 2024 to US$ 112 billion by 2031”. The government of India is taking several initiatives to drive the growth of domestic electronic equipment industries and capitalize Industry 4.0.
In line with the ‘Make in India’ policy, and rectification of the inverted duty structure, the government has proposed to increase the Basic Customs Duty (BCD) on multiple electronics products including on Interactive Flat Panel Display (IFPD) from 10% to 20% and reduce the BCD to 5% on Open Cell and other components. This as a result will promote in-house electronic devices and gadgets production.
Conversely, there has been a significant reduction in customs duties for numerous electronics and semiconductor products. Some of the key electronic items that will be notably affected by this change include components and sub-components of PCBA (printed circuit board assembly), camera modules, connectors, and materials used in the production of microphones, receivers, wired headsets, fingerprint readers/sensors for mobile phones, and USB cables. The customs duty on these items has been reduced from 2.5% to zero.
Additionally, the customs duty on specific components—such as chip-on-film, PCBA (printed circuit board assembly), and glass boards/substrate cells—used in the production of open-cell TV panels for LED/LCD TVs will be slashed from 2.5% to zero. Similarly, the import duty on carrier-grade Ethernet switches will be significantly lowered to 10%, down from the previous steep rate of 20%. Meanwhile, in another critical electronics sector, tariffs for open-cell modules (with or without touch functionality), touch glass sheets, and touch sensor PCBs used in interactive flat-panel display modules will now be set at 5%, a notable drop from the earlier range of 10%–15%.
These revision in the custom duties is expected to help the industry in lowering production costs, improving competitiveness, attracting investment, encouraging technological growth, and fostering both domestic and international economic expansion.
A significant policy update to bolster domestic electronics manufacturing is the introduction of a new presumptive taxation framework targeting non-resident Indians (NRIs) contributing services or technology to establish electronics production facilities in India. Under this scheme, 25% of the total income received by NRIs will be deemed taxable profit, translating to an effective tax rate of less than 10% on gross earnings. This simplified tax structure aims to incentivize foreign investment from NRIs into India’s electronics manufacturing ecosystem, streamlining compliance and enhancing financial viability for overseas contributors.
Mittal concludes:- The Budget 2025 represents a crucial moment for India's electronics and semiconductor industry by providing the essential infrastructural, fiscal support and growth impetus. With a prime focus on promoting self-reliance, innovation, sustainability, and global competitiveness, this budget could lay the foundation for the Indian semiconductor industry to more than double by 2031 and emerge as a major hub for technological advancement and manufacturing in this critical sector.
Author: Ankita Mittal
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