Govt Waives Basic Customs Duty on Electronics Components: What You Need to Know?

On July 9, 2026, news broke that the Ministry of Finance had issued three customs notifications dated July 8 that did something straightforward yet genuinely impactful for India’s electronics manufacturing sector. It slashed the basic customs duty on a carefully selected list of components and machinery to zero.

No announcement event. No press conference. The government simply waived customs duty on inputs that matter, quietly but effectively, through three notifications that could shift significant investment decisions in electronics, battery manufacturing, and electric mobility.

This is the kind of policy that does not make front-page headlines but shows up very clearly in quarterly earnings of the right companies, one to two quarters after it goes live.

What the Government Actually Did?

The three notifications are distinct, and each targets a separate part of the electronics value chain. Understanding each one matters because the benefit flows differently across the industry.

Notification No. 25/2026-Customs: Display Assembly Components

The first notification exempts five components used in manufacturing display assemblies for automotive, medical, and industrial applications from basic customs duty, with the exemption in effect until March 31, 2029. The five components covered are display cells, flexible printed circuit assemblies known as FPCAs, backlight units, frames, and anisotropic conductive film or ACF.

One important clarification, which the notification makes explicitly: this exemption does not cover display assemblies for mobile phones, smartwatches, smart meters, television panels, or interactive flat-panel displays. The relief is specifically targeted at automotive dashboards, medical imaging equipment, and industrial control displays, a deliberate choice to focus the customs duty waiver on emerging and strategically important application areas.

Notification No. 26/2026-Customs: Wireless Charging Module Components

The second notification extends nil customs duty on six electronic components used in manufacturing inductor coil modules for wireless charging in cellular mobile phones, again valid until March 31, 2029. The six components are nano-crystalline assemblies, E-shields, PET liners, PC shims, stranded and NFC coils, and neodymium-iron-boron magnets, referred to as NdFeB magnets.

Each of these parts plays a specific role in how wireless charging actually works. NdFeB magnets handle coil alignment. E-shields reduce electromagnetic interference. PET liners and PC shims handle heat dissipation and structural support. Together, they form the internal anatomy of every wireless charging receiver built into modern smartphones. By making these electronic components cheaper to import for local manufacturing, the government is directly reducing the cost of producing wireless charging-capable phones in India.

Notification No. 27/2026-Customs: Lithium-Ion Cell Manufacturing Machinery

The third notification is structurally different. Instead of exempting input components, it expands the list of capital goods eligible for concessional customs duty in lithium-ion cell manufacturing, replacing an older, fragmented list with a comprehensive, technology-neutral list of 85 categories of machinery.

This expanded list covers the full production process for a lithium-ion cell: coating machines, winding machines, welding systems, testing equipment, formation machines, drying systems, and other specialised equipment. By consolidating what were previously separate and inconsistent exemptions for mobile battery lines and EV battery lines into a single, technology-neutral framework, the government has removed a source of regulatory friction that was creating uncertainty for manufacturers planning capital investment.

What S. Krishnan Said, and Why It Matters?

Electronics and IT Secretary S. Krishnan of MeitY, the Ministry of Electronics and Information Technology, spoke directly on this development. He said the government’s move to waive basic customs duty on key components for electronics manufacturing will help deepen the value chain and the ecosystem.

That framing, value chain deepening, is exactly the right lens through which to read these three notifications. This is not about making imports cheaper for their own sake. It is about pulling more stages of electronics production into India so that what gets built here over the next three years contains progressively more Indian-made value inside it. MeitY has been the policy anchor for India’s electronics ambitions, and S. Krishnan’s statement signals that the ministry sees this customs duty waiver as a meaningful structural step, not a routine fiscal tweak.

Why Does This Matter More Than It Looks?

India’s electronics story over the past decade has been impressive at the assembly level. Mobile phone production has grown 33 times since 2014. India became the world’s second-largest mobile manufacturer. Electronics exports climbed significantly under the Make in India programme.

But the weakness in that story has always been the same: almost none of the electronic components inside those phones were made in India. Assembly happened domestically. Value addition happened elsewhere, in China, Taiwan, South Korea, Japan, and Southeast Asia. India got the labour story but not the component story, and the component story is where most of the actual value in electronics manufacturing sits.

The PLI scheme started changing this by incentivising domestic production at the assembly and component level. The govt waives custom duty approach is the fiscal complement to that incentive structure. By making imported components cheaper for domestic manufacturers using them in production, the government is pulling more of the value chain into India rather than leaving it offshore.

Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, was direct about the impact: by reducing the import cost of critical components and capital goods, these measures are expected to improve the cost competitiveness, encourage greater domestic value addition, and support the localisation of high-value manufacturing in smartphones and other electronic products. The expanded list of exempted capital goods for lithium-ion cell manufacturing is also likely to accelerate investments in domestic battery production.

That point about battery manufacturing is worth sitting with. The global transition toward electric vehicles is creating enormous demand for lithium-ion cells. Also, India currently imports almost all of its battery cells. The 85-category machinery exemption is a clear signal that the government wants to change this, not in five years, but starting now.

What Specifically Benefits and How?

The three notifications together create immediate cost advantages for specific categories of local manufacturing.

Companies setting up or expanding display manufacturing for automotive applications, medical devices, and industrial equipment now face lower input costs on five critical components. Given that automotive displays are growing rapidly as vehicles integrate more digital interfaces, this timing is well-chosen.

Smartphone manufacturers building wireless charging capabilities into their Indian-made devices now have lower customs duty on the six components that go into wireless charging receivers. As wireless charging becomes standard across price points, not just flagship models, this cost reduction becomes meaningful at scale.

And for any company investing in domestic lithium-ion cell manufacturing, the 85-category machinery list covers the full production floor. This removes the uncertainty about which equipment qualifies for concessional rates, which was previously forcing companies to seek clarifications or accept partial benefit.

What Does This Mean for Investors?

This policy did not go unnoticed in the market. EMS sector stocks, including Dixon Technologies, Kaynes Technology, Amber Enterprises, and Syrma SGS, all surged up to 5% on the day of the announcement. That market reaction tells you exactly which companies investors believe benefit most directly.

For investors tracking India’s electronics manufacturing and electric mobility sectors, the customs duty waiver is meaningful in two distinct ways.

The first is the direct margin impact. When input components become cheaper to import for domestic manufacturing, that improvement in cost structure flows directly into operating margins for companies already producing these categories domestically. This benefit shows up in earnings within one to two quarters.

The second is the investment signal. The March 2029 horizon on the display, wireless charging, and lithium-ion machinery exemptions, give manufacturers a long enough runway to justify fresh capital investment in domestic production capacity. When companies have three years of regulatory certainty, they commit to building. That capacity addition creates its own investment thesis over the next two to three years.

The EV angle is particularly important here. Every major global automaker is expanding EV production. India’s domestic EV adoption is accelerating. The lithium-ion cell manufacturing push, supported by the 85-category machinery BCD exemption, is positioning India to produce the batteries that power this transition domestically rather than importing them. Companies building this capacity now are positioning themselves at the centre of a demand cycle that will grow significantly through the rest of this decade.

For HNIs and long-term investors building portfolios around India’s industrial transformation, this basic customs duty move does not sit in isolation. It sits alongside CG Semi’s chip plant inauguration, the ongoing PLI rollouts, the semiconductor mission, and the broader Make in India push as part of a coherent government strategy to move India from an assembly economy to a genuine component manufacturing economy. That transition, if it continues at the current pace, creates durable, structural investment themes across electronics, battery, and EV-linked manufacturing for years to come.

Final Thought

Three customs notifications issued on a Wednesday do not usually generate much excitement outside industry circles. But these three cover display components, wireless charging parts, and lithium-ion cell machinery, and together they add up to a meaningful push to deepen India’s electronics value chain rather than keep it at the assembly layer.

As MeitY Secretary S. Krishnan framed it, the goal is to deepen the ecosystem. The exemptions are targeted, time-bound where appropriate, and structured to give manufacturers the cost certainty and investment runway they need to commit to domestic production. For India’s ambition of becoming a meaningful global player in electronics and electric mobility manufacturing, that is exactly the kind of policy scaffolding that makes the difference between a government announcement and a genuine industrial shift.

At Bonanza Wealth, we track policy developments like this closely because they consistently create investable themes well before most retail investors notice them. If you want to understand how India’s electronics and manufacturing growth story should shape your portfolio positioning, our team is here to help you think it through properly.

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