Union Budget 2026: Will smartphones become cheaper?

Union Finance Minister Nirmala Sitharaman on Sunday (February 1) presented her ninth consecutive Budget at Parliament.

Thanks to the earlier Production Linked Incentive (PLI) scheme, the government managed to boost domestic manufacturing, attract foreign investment, and reduce imports of smartphones.

It can be noted that at the start of Prime Minister Narendra Modi's tenure in 2014-15, India's import of smartphones stood at around 75 per cent. Now, it has reduced to just 0.02 per cent. Domestic manufacturing has grown from 5.8 crore units to 33 crore units to cater to not just local markets but also international markets. These exports have surged over 100 times, reaching Rs 2 lakh crore in 2024-25.

To keep the momentum going, FM has announced certain changes in law that can enable smartphone makers to further scale up the local manufacturing in India.

Major companies such as Apple have long requested goverment not to tax equipment offered to contract manufacturers such as Tata and Foxconn. The latter used to spend more from their pocket to secure such high-tech components to make tools. If devices are sold within India from ‌such factories, they will attract import taxes, making such facilities attractive only for exports.

Now, the tweaked law ensures that mere ownership of machines by a foreign company does not lead to ⁠income or taxes on it.

The rule change will apply until the 2030-31 tax year and only to ⁠factories set up in so-called customs-bonded areas, which are technically considered ⁠to be outside India’s customs border. This will greatly help consumer electronics majors such as Apple, Samsung and others to scale up the local manufacturing of products in India.

Further, FM laid out the new India Semiconductor Mission 2.0. This initiative plans to build on the country’s semiconductor capabilities. ISM 2.0 will focus on equipment and material manufacturing and indigenous IP design. The government hopes to have industry-led R&D and training centres to create a skilled workforce.

Also, FM Nirmala Sitharaman has doubled the outlay for electronics manufacturing from Rs 22,919 crore to Rs 40,000 crore. And, FM announced that high-tech tool rooms will be established at two locations to give a push to capital goods manufacturing.

Union Budget 2026: Will this new reforms lead to a drop in the prices of smartphones in India?

The new reforms announced may not immediately effect any reduction in smartphone prices in India, as there are huge supply constraints of memory chips and semiconductors worldwide.

Most of the top chipmakers have heavily prioritised shipments to big technology companies scaling up Artificial Intelligence (AI)-powered data-centres infrastructure.

This has caused an increase in chipset prices for smartphone makers. For devices under Rs 20,000, the bill of materials has surged by 20-30 per cent. It is even more for premium phones.

The AI data centre-induced semiconductor crunch is expected to extend not just in 2026, but even in 2027.

However, the new tax relief may allow big companies like Apple and Samsung to offer smartphones launch prices same as the previous iterations.

With inputs from agencies.

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