Government Raises Customs Duty to Boost Local Display Manufacturing

The Union Finance Ministry has taken a major step to strengthen domestic electronics manufacturing by increasing the Basic Customs Duty (BCD) on flat panel displays to 20%. This decision is part of a broader effort to make India a global hub for electronics production and support the government’s Make in India programme. 

Correction of Inverted Duty Structure

Alongside the duty hike on finished displays, the government has reduced the BCD on open cells and key display components to 5 per cent. Earlier, imported finished goods often attracted lower taxes than raw materials used by Indian manufacturers. This inverted duty structure made local production less competitive. The revised duty framework is designed to correct this imbalance and make domestic manufacturing more economically viable.

Relief for Open Cells and Key Inputs

Open cells are a critical component in the production of LCD and LED televisions. Lowering the customs duty on these inputs reduces production costs for Indian manufacturers. In addition, the government has fully exempted BCD on parts of open cells. Earlier budgets had already reduced duties on these parts, and the complete exemption now provides further relief. This move is expected to encourage local production of open cells and strengthen supply chains within India.

Encouraging Investment and Manufacturing Scale

By making imported finished displays more expensive and raw materials cheaper, the policy creates a clear incentive for companies to invest in Indian manufacturing facilities. Domestic manufacturers as well as global original equipment manufacturers are likely to consider setting up or expanding production units in India. Over time, this could lead to better technology adoption, job creation, and improved manufacturing scale in the display and television segment.

Learning from the Smartphone Manufacturing Model

The new duty structure follows a strategy similar to the one used in smartphone manufacturing. In that sector, gradual increases in duties on finished products and reductions on components encouraged companies to localise production. This approach helped India emerge as one of the world’s largest mobile phone producers. The government is now applying the same model to display and TV manufacturing, with the expectation of similar success.

Impact on Prices and Exports

In the short term, prices of imported high-end flat panel displays may rise slightly. However, this is expected to be temporary. In the long run, increased local production could stabilise prices and improve availability. More importantly, a strong domestic display ecosystem could help India meet local demand and grow as an exporter of LCD and LED products.

Read more: Budget 2026: Centre Invites Public Suggestions Through MyGov Platform.

Conclusion

Overall, the revised customs duty structure marks an important step towards building a self-reliant electronics manufacturing ecosystem. By supporting local production and attracting investment, the policy moves India closer to becoming a global electronics manufacturing powerhouse.

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