Mobile-laptop will have to be made cheaper! Government waived tax on components, there was a bumper rise in the shares of Dixon and Keynes.

Today, tremendous action and momentum is being seen in the shares of companies of Electronic Manufacturing Services (EMS) sectors in the Indian stock market. The Central Government has taken a very game-changing policy decision towards increasing the pace of domestic electronics production and making India a ‘manufacturing superpower’ of the world. The government has made a historic announcement of completely waiving the Basic Custom Duty (BCD) imposed on many extremely important and vital components used in the manufacturing of electronic goods.

Tax exemption will be available till 2029, now there will be no tax on import of these components

According to the latest guidelines issued by the Finance Ministry, the government has reduced the import duty (custom duty) on essential raw materials and parts used in the manufacturing of Display Assembly, Lithium-ion Cells and Inductor Coil Modules to zero. This new rule and tax exemption of the government will remain fully effective and valid till March 31, 2029. This simply means that for more than the next three years, domestic companies will not have to pay any additional tax for importing these high-tech parts from abroad, which will lead to a huge reduction in their production cost.

India will become global hub of electronics, smartphones and smart TVs will become cheaper

This strategic step of the Central Government is being seen as an attempt to make India a strong global hub of electronics manufacturing. This tax cut and exemption will have a direct positive impact on the domestic production of popular electronic devices like smartphones, laptops, wearables (like smartwatches and earbuds) and smart TVs in the country. Due to reduction in costs, in the coming days, these electronic gadgets can become much more affordable and cheaper for common consumers than before. Also, this will help in giving tough competition to China at the global level under the ‘Make in India’ campaign.

Silver of EMS companies like Dixon Tech and Keynes, investors got big benefits

As soon as the news of this big decision of the government reached Dalal Street (stock market), the shares of big companies related to electronics manufacturing took off. Heavy buying is being seen in the stocks of major EMS companies like Dixon Technologies, the country’s largest contract manufacturing company, and Kaynes Technology. Market experts believe that this relief in custom duty will directly improve the operating margins and profitability of these companies, due to which investors are betting heavily on these sectors and the shares are moving towards record highs.