As Finance Minister Nirmala Sitharaman finalizes the Union Budget 2026, one voice is cutting through the noise with urgent clarity: the MAIT—the Manufacturers’ Association for Information Technology. In a detailed submission ahead of the February 1 budget announcement, MAIT has laid out a stark warning: India’s electronics manufacturing ambitions are hitting a wall, not due to lack of vision, but because of outdated import tariffs that penalize domestic assemblers .
The core demand? Slash the Basic Customs Duty (BCD) on over 50 critical electronic components—including printed circuit boards (PCBs), connectors, capacitors, and display drivers—that are still not manufactured at scale in India. Without this relief, MAIT argues, local manufacturers remain uncompetitive against fully integrated global rivals, and the ‘China+1’ supply chain shift may bypass India entirely .
Table of Contents
- What MAIT Is Asking For in Budget 2026
- Why High Customs Duty Is Hurting ‘Make in India’
- The Crucial Push for Mobile Manufacturing
- Bridging the Global Competitiveness Gap
- Will the Government Listen?
- Conclusion: A Make-or-Break Moment for India’s Tech Ambitions
- Sources
What MAIT Is Asking For in Budget 2026
MAIT’s pre-Budget memorandum isn’t just a wishlist—it’s a strategic roadmap backed by data from over 150 member companies, including Dixon Technologies, Bharat Electronics, and HP India. Key proposals include:
- Reduce BCD on non-domestically produced components from current rates (often 10–15%) to 0–5% for at least 3–5 years.
- Extend PLI scheme benefits to Tier-2 and Tier-3 electronics manufacturers beyond just mobile phones and IT hardware.
- Introduce tax credits for R&D in component-level innovation, not just final assembly.
- Fast-track approvals for electronics manufacturing clusters under the Modified Electronics Manufacturing Clusters (EMC 2.0) scheme .
“We’re not asking for subsidies,” said a senior MAIT official. “We’re asking for a level playing field so we can compete globally while creating jobs at home.”
Why High Customs Duty Is Hurting ‘Make in India’
On paper, high import duties protect domestic industry. In practice, they often backfire—especially in electronics, where 70–80% of a device’s value comes from imported components .
For example, an Indian smartphone assembler pays 20% duty on finished phones (to deter imports) but also 10–15% on essential parts like camera modules or RF chips—many of which aren’t made locally yet. This double taxation inflates production costs by 12–18%, making ‘Made in India’ phones more expensive than Chinese or Vietnamese alternatives—even before reaching consumers .
[INTERNAL_LINK:make-in-india-challenges] The result? Companies either absorb losses, pass costs to buyers, or quietly relocate final assembly to countries with smarter tariff structures like Vietnam or Mexico.
The Crucial Push for Mobile Manufacturing
MAIT specifically emphasized the need to sustain momentum in mobile phone manufacturing—a rare success story under the Production-Linked Incentive (PLI) scheme. India now produces over 300 million phones annually, second only to China .
But this progress is fragile. With global giants like Apple and Samsung diversifying to Thailand and Indonesia, India must offer more than just labor cost advantages. “Continued support for mobile manufacturing isn’t optional—it’s existential,” the MAIT statement warned, urging the government to extend PLI Phase II with deeper component-level integration targets.
Bridging the Global Competitiveness Gap
MAIT’s plea comes amid rising geopolitical tensions and supply chain realignments. According to the World Bank, countries that reduced input tariffs saw a 22% faster growth in export-oriented manufacturing .
Vietnam, for instance, maintains near-zero duties on electronic inputs, allowing firms like Samsung to build end-to-end ecosystems. India, by contrast, still treats components as revenue sources rather than enablers of industrial growth. MAIT argues that a temporary duty rationalization would actually increase long-term tax revenue by expanding the manufacturing base and formal employment.
Will the Government Listen?
Historically, the Finance Ministry has been cautious about reducing customs duties, viewing them as a key revenue stream (accounting for ~20% of non-GST tax receipts). However, recent budgets have shown flexibility—for example, duty cuts on lithium-ion cells in 2024 to boost EV adoption.
With elections looming in several states and ‘Viksit Bharat’ as a central narrative, Budget 2026 may be the perfect moment to act. Industry insiders suggest a phased reduction—starting with 10 high-impact components—could be announced without major fiscal disruption.
Conclusion: A Make-or-Break Moment for India’s Tech Ambitions
The MAIT’s call isn’t just about tariffs—it’s about strategic vision. India stands at a crossroads: it can either double down on smart, ecosystem-friendly policies that attract deep manufacturing, or remain a final-assembly stopgap in global supply chains.
Budget 2026 could be remembered as the moment India chose ambition over caution. If the government heeds MAIT’s advice, it won’t just help companies—it will ignite a new era of innovation, jobs, and technological self-reliance. The ball is now in the Finance Ministry’s court.