New Delhi has just provided the smartphone manufacturers of the world with a reason to make more and import less in India. Earlier this month the finance ministry unannounced a 5%/7.5% customs duty waiver on a bunch of parts that are used in mobile phones and other electronics: wireless charging modules, lithium-ion battery cells and display parts for medical devices and vehicles. This exemption is not a sweet pass either, as it extends through March 2029, providing manufacturers with almost four years of certainty on costs to plan factories, negotiate supplier contracts and invest capital with the ability to see the tax bill under their feet change.

At first glance, it's merely another addition to India's long campaign of trying to lure electronics manufacturing away from China. But delve a little deeper and the timing and trajectory of the move reveal a more fascinating narrative about the actual place in which India believes it can win and the one in which it cannot.

Think about who will gain the most. Samsung, which has operated its Noida plant – the world's largest smartphone factory with an annual production capacity of around 120 million for three decades, already has a well-established local supply chain and procures components from a significant proportion of the local market. The duty cut is a nice to have for Samsung. It's more of a lifeline for Apple and Xiaomi. Apple has no manufacturing plant in India, it relies completely on an assembly partner like Foxconn, Tata Electronics, Pegatron and these are the companies that bring in a significant proportion of batteries, camera modules, charging hardware from South Korea, Taiwan, Japan and China. Those imports detract from companies' thin profit margins that have been under pressure thanks to the surge in memory chip prices lately, a trend the industry has begun to term “chipflation.” The company, which has been dependent on so much on the budget and mid-range sectors that have lower margins, probably needed this more than Apple did.

This lithium-ion part is the one to keep an eye on. Removing duties on cell manufacturing inputs would attract fresh investment to India's battery manufacturing industry, which is at the crossroads of two major bets on the Indian market consumer electronics and electric vehicles, said Manoj Mishra, who is a partner at Grant Thornton Bharat and spoke to Reuters. If that investment makes good, India is not only reducing the cost of phone assembly but also building a battery system that can power phones, as well as cars, and that's a much more attractive prize than another iPhone shipment.

When viewed from a distance, the scope of India's ambition is more apparent. The government's aim is to make electronics manufacturing to reach $500 billion by the fiscal year 2030, which is 57 times higher than what the industry has achieved in smartphones manufacturing since FY 2024-25. Domestic value addition of the finished value of a product created by Indian labour and materials as opposed to imported sub-assemblies (S/A) has already risen from around 30% to 70% and is expected to reach 90% by FY27. That's the last number that is far more important than any headline export figure as it is the difference between India being a place where phones are merely screwed together and it being a place where phones are substantially built.

The larger overall figures support the rationale behind the manufacturers' interest in the world. As per EY estimates, the global electronics market is valued at nearly $1.8 trillion with China accounting for around 60%. By comparison, India's own electronic components market is expected to hit around $150 billion by 2030 a far cry from China's size, but based on a much smaller foundation and buoyed by the political momentum of the “China+1” strategy of all Western companies. Apple's exports from India grew by 42 percent year-on-year to $12.8 billion in 2024 and India's manufacturing volume of smartphones surged 240 percent for the quarter ending September 2025 to become the nation's largest exporter to the United States. This is not a mere tweak it's a real-time re-writing of the supply chain.

There is no smooth way about this, and it would be a lie to say that the ecosystem has no issues. Tata Electronics, iPhone maker Apple's supplier, is grappling with the fallout of a data breach that allegedly leaked over 200,000 of its internal documents, while farmers in the vicinity of one of its component factories are also questioning the company on charges of polluting them with wastewater. But both events have not dampened Apple's ambitions to expand into India, and they highlight the need for governance and environmental regulations to catch up with the scale of the investments it is seeking in India.

There's also a softer truth that lurks beneath the math of tariffs that cuts: Import substitution is the easy half. The hard part will be developing the domestic skills and infrastructure to eventually no longer need these imports, and the government has separately approved semiconductor projects worth nearly $18 billion, printed-circuit-board projects worth approximately $14 billion with 249 applications and a proposed $2.7 billion in components manufacturing. Low-cost imports stave off the competition. They in themselves do not purchase self-sufficiency.

What India did this month is to gain the trust of the manufacturers, who had been hovering on the edge of turning their backs on the government, and to push the economy of battery and component-making further onto the government's side. That will rely on not only this announcement, but on what New Delhi does next on customs clearers who can get goods out without delay, power infrastructure that doesn't devolve into another Tata controversy and a component ecosystem that can eventually make such duty exemptions unnecessary, not indispensable.The two visuals above depict the composition of the two new categories of electronics exempted, as well as the value trajectory of the electronics industry in India, and a simple animation of the assembly line economics involved.