India's electronics aspirations are entering a new stage. Having become one of the biggest smartphone manufacturing centers globally, India is now focusing on enhancing the electronics value chain by boosting domestic production of components and capital equipment.

In this regard, the Centre has extended customs duty exemptions on various machinery and parts utilized in electronics production—including lithium-ion batteries, display modules, and smartphone parts—until March 31, 2029.

The exemption, effective immediately, is anticipated to reduce the expense of importing specialized equipment that is not extensively produced in India, enhancing the appeal of new investments in advanced electronics manufacturing.

The action signifies the government's recent initiative to go beyond merely assembling completed goods and to enhance domestic value addition, which is currently estimated to be around 18-20%. Policymakers are more and more concentrating on localising the wider electronics supply chain by promoting investments in essential components, capital equipment, and battery production.

The most significant alteration concerns the production of lithium-ion batteries. The government has significantly increased the roster of machinery that qualifies for reduced customs duty by substituting the previous listings under a current exemption notice with a fresh compilation featuring 85 types of equipment, encompassing machines utilized throughout the battery manufacturing process—from material mixing, coating, and pressing to winding, stacking, electrolyte filling, testing, and packaging.

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The updated list additionally includes auxiliary systems like solvent recovery, heat recovery, dust collection, and effluent treatment.

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In a different announcement, the government broadened customs duty exemptions to five essential parts utilized in the production of display assemblies for automotive, medical, and industrial uses, which include display cells, flexible printed circuit assemblies (FPCAs), backlight units, frames, and anisotropic conductive film (ACF).

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The exemption excludes display assemblies utilized in mobile devices, smartwatches, televisions, smart meters, or interactive flat-panel screens.