UNION BUDGET 2025-26: What It Has For The Electronics Sector

With reduced and exempted duties, tax relief for manufacturing, and increased support for startups, the Union Budget 2025-26 tackled a broader spectrum of issues in India's electronics ecosystem. Industry reactions, however, remain mixed.

- SHUBHA MITRA

On 1st February 2025, Finance Minister Nirmala Sitharaman presented her eighth consecutive Union Budget. The Budget for Fiscal 2025-26 outlines ambitious plans under the 'Viksit Bharat' vision for a developed India. It projects total receipts (excluding borrowings) at ₹34.96 trillion and total expenditure at ₹50.65 trillion. Capital expenditure for FY26 has been revised downward to ₹10.18 trillion from ₹11.1 trillion in FY25.

Local manufacturing remained a focal point, with incentives for startups and adjustments to basic customs duties (BCD) on components and critical minerals. While no groundbreaking schemes were introduced, the Finance Minister repeatedly underscored the tech-driven era shaping India's economy.

No duty, less cost, more local

Tariff rationalisation took centre stage this time. Among the key duty revisions, the BCD on interactive flat panel displays (IFPD) doubled from 10% to 20%, while their open cells and related components saw a reduction to 5% to support critical production. This move is expected to give a major boost to India's ₹70 billion IFPD market, according to Sunil Vachani of Dixon Technologies.

Building on last year's reforms, which lowered the BCD on open cell parts for LCD/LED TVs from 5% to 2.5%, these duties were now fully exempted, further cutting costs. Similarly, the BCD on inputs for wired headsets, microphones, finger- print readers, and USB cables dropped from 2.5%. The industry welcomed these changes, anticipating a more competitive cost structure that drives investments and local production.

Lower data centre setup costs? That too. The BCD on carrier-grade Ethernet switches fell from 20% to 10%, making last-mile connectivity more affordable. From Adani to Microsoft, telecom players see this as a positive shift for India's digital infrastructure.