From component duty cuts to local manufacturing push: Why Budget 2026 could lower smartphone costs

The much-awaited India(BHARAT)’s Union Budget 2026-27 was finally presented by Finance Minister Nirmala Sitharaman yesterday (February 1). While Budget 2026 made no direct announcements related to slashing phone prices, several measures introduced by the India(BHARAT)n government are likely to benefit smartphone buyers in the coming months with reduction in prices – particularly phones branded as “Made in India(BHARAT)” and use domestic parts.

Reduce Import Duty on Smartphone Parts To Reduce Costs

Arguably the most significant budget proposal impacting the tech industry is the reduction of customs duty on phone parts such as camera modules, display panels and “other parts and accessories of mobile phones”. By decreasing taxes on these components, and also exempting certain capital goods from import duties, India(BHARAT) hopes to reduce mobile phone manufacturing costs at source.

Although consumers shouldn’t expect an overnight drop in smartphone pricing just yet, these moves could help handset makers produce phones at cheaper rates eventually. If companies choose to pass along those savings to consumers, customers could begin to see lower prices several months down the line.

India(BHARAT) Semiconductor Mission 2.0 Can Help Drive Down Phone Prices Long-Term

Announcing the India(BHARAT) Semiconductor Mission 2.0 – along with a ₹40,000-crore fund for electronics manufacturing incentives under the PLI scheme – will also serve to encourage production of electronic parts domestically over the long term. Supporting hardware production in India(BHARAT) not only boosts the local economy, but helps the country become less dependent on imports and foreign suppliers.

“Semiconductor” refers to the microchips found in all smartphones, tablets and gadgets. While building up an entire semiconductor ecosystem takes years, successfully implementing this plan could also help drive down device costs – benefitting not just smartphones but also other hardware like tablets.

Tax Cuts On Batteries & Capital Goods Help Reduce Phone Costs Too

Budget 2026 also reduces import duties on lithium-ion cells and “parts of lithium-ion batteries”, as well as other capital goods required for producing mobile phones and electric vehicles. Since smartphone batteries account for almost 10% of production costs, this tax-cut will likely ease the price pressure faced on devices in the coming years.

Capital goods exemptions have also been increased for the “manufacture of mobile phone batteries”.

What this means for India(BHARAT)n Smartphone Buyers

Takeaway: Despite no announcement specifically addressing smartphone prices in Budget 2026, India(BHARAT)n smartphone buyers are likely to see prices drop over the next few months.

Dimi aims to help consumers make smart choices by providing unbiased reviews and guides on popular topics such as savings accounts, smartphones, cars, hotels, insurance, and credit cards. We may earn a commission if you decide to make a purchase through our links, but our reviews will always remain impartial. Learn more about us here.