Customs duty on electronic goods raised to 20%, says Finance Ministry

The Union Finance Ministry has taken a strong step to support local electronics manufacturing, which has increased the Basic Customs Duty (BCD) on flat panel displays to 20 per cent. The move aims to make India a major global hub for electronics production and support the government’s ‘Make in India’ push.

At the same time, the government has reduced the BCD on open cells and key display components to 5 per cent. This change is meant to fix the inverted duty structure, where finished imported goods were taxed less than raw materials used by Indian manufacturers.

Why has the government increased import duty on flat panel displays?

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The higher duty on flat panel displays is meant to discourage imports of finished products and encourage companies to manufacture displays inside India. When finished displays are taxed at a higher rate, it becomes cheaper for companies to make them locally instead of importing them.

The Finance Minister shared the decision on the social media platform X, saying the move supports Make in India and corrects the inverted duty structure. The BCD on Interactive Flat Panel Displays (IFPD) has been increased from 10 per cent to 20 per cent, while duties on important inputs have been lowered.

To promote domestic manufacturing and correct inverted duty structure, BCD on Interactive Flat Panel Displays increased to 20%, while BCD on Open Cells and key components was reduced to 5%. (1/2)#BudgetForViksitBharat #PBC2026 pic.twitter.com/vm473ctOdv

— Ministry of Finance (@FinMinIndia) January 21, 2026

This approach helps Indian manufacturers compete better with imported products.

What is the relief for open cells and display components?

To balance the higher duty on finished goods, the government has cut the BCD on open cells and other key components to 5 per cent. Open cells are a critical part used to make LCD and LED TVs.

The cost-cutting measure will benefit India's manufacturers, making indigenous production economically viable. In addition, it is a way of motivating firms to bring more investment in factories and supply chains in the country.

The Finance Ministry said the goal is to support domestic production rather than increase costs for manufacturers.

Why are open-cell parts now fully exempt from customs duty?

The government has gone one step further by fully exempting BCD on parts of open cells. Earlier announced duty cuts in the 2023-24 Budget have been one of the reasons to justify this measure, when the duty on these parts had been cut down from 5 per cent to 2.5 per cent.

The duty on these parts has now been abolished altogether. This action is believed to enhance the local production of open cells in the making of LCD and LED TVs.

Indian companies would be able to produce more at a lower cost and thus, deal with the global market more effectively.

How does the policy follow the smartphone manufacturing model?

This policy follows the same strategy used earlier in the smartphone sector. The world’s second-largest producer of mobile phones was India through the staged manufacturing programs.

In a gradual manner, the government increased the tax on finished products, at the same time, reduced the tax on components, thus making the companies think that it would be beneficial for them to manufacture locally.

A similar model is now being applied to the display and TV manufacturing sector.

The success of smartphones gives confidence that this plan can work for displays too.

What does this mean for prices, investment, and exports?

In the near future, buyers might notice a minor hike in the prices of imported high-end flat panel displays. On the contrary, specialists are anticipating this to be only a short-lived phenomenon.

In the long run, the policy is likely to attract more domestic and global investment. Indian manufacturers and global OEMs will be encouraged to localise their supply chains to avoid the 20 per cent duty on finished displays.

The larger goal is to build a self-reliant display ecosystem that meets local demand and also helps India become a strong exporter of LCD and LED products.

Overall, the move marks a major step toward making India a global electronics manufacturing powerhouse.