Dixon Tech, Syrma SGS, Amber shares surge up to 6%. What does customs duty relief mean?

Shares of Dixon Technologies, Syrma SGS Technologies and Amber Enterprises rose as much as 6% on Thursday after the Centre expanded customs duty concessions on a range of machinery and components used in electronics manufacturing.

The benefits, which come into effect immediately, cover equipment and parts used in lithium-ion batteries, display modules and smartphone components, and will remain in force until March 31, 2029.Syrma SGS jumped 6% to Rs 1,440 on the BSE, while Dixon Tech rallied 5% to Rs 13,525 per share.

Amber Enterprises rose 3% to Rs 7,645 per share.

The decision is expected to lower the cost of importing specialised machinery and components that are not widely produced in India.

It is also aimed at encouraging fresh investments in battery cell manufacturing, automotive electronics and advanced electronics assembly.Exemption detailsThe most significant change relates to lithium-ion battery manufacturing.

According to a notification issued by the Central Board of Indirect Taxes and Customs (CBIC), the government has replaced the earlier list of eligible machinery under the existing exemption notification with a revised list covering 85 types of equipment.

The expanded list includes nearly all machinery used across the lithium-ion battery manufacturing process.The Centre has also extended customs duty concessions to six components used in the manufacture of inductor coil modules for wireless charging in mobile phones.

These include nano-crystalline assemblies, E-shields, PET liners, PC shims, coils and neodymium magnets.Also read: Govt extends duty relief for electronics, lithium-ion battery manufacturing till 2029The revised exemption list spans equipment used throughout the battery production cycle, including material mixing, coating, pressing, slitting, winding, stacking, electrolyte filling, welding, testing, ageing, inspection and packaging.

It also covers auxiliary systems such as solvent recovery, heat recovery, dust collection and effluent treatment.In a separate notification, the government announced customs duty relief on five key components used in display assemblies for automotive, medical and industrial applications.

The eligible components include display cells, flexible printed circuit assemblies (FPCAs), backlight units, frames and anisotropic conductive film (ACF).The latest measures are part of the government's broader effort to strengthen domestic manufacturing capabilities and build resilient supply chains in sectors linked to electronics and electric mobility.How will this benefit Dixon, Syrma, and Amber?Dixon Technologies, India's largest domestic contract manufacturer of smartphones, IT hardware and television sets, is expected to benefit from lower input costs.

The customs duty relief is likely to improve unit economics, support margins and aid the company's continued expansion in its mobile and electronics manufacturing businesses.For Syrma SGS Technologies, the concessions are favourable given its presence in the domestic production of magnetic products such as inductor coils, chokes and transformers.

The duty relief on components used in inductor coil modules is expected to improve the competitiveness of domestic assembly compared with direct imports from China.Read more: Dixon, Amber, Syrma: Harshit Kapadia on why India's EMS sector is back on the radar & which stocks to buyAmber Enterprises is also likely to benefit through lower costs for importing specialised machinery required for its expanding electronics manufacturing services (EMS) business.

The measure could improve project viability, support future capacity additions and strengthen the domestic electronics manufacturing ecosystem over the longer term.India's Electronics Manufacturing Services sector has grown from $10 billion to $40 billion in just five years, and according to Harshit Kapadia, Vice President at Elara Securities, the structural story is far from over."This is going to run for decades from now," Kapadia told ET Now, pointing to a powerful combination of global supply chain diversification, India's manufacturing cost advantage, and the government's renewed policy push, including a fresh outlay of ₹40,000 crore for the EMS sector.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.

These do not represent the views of The Economic Times) ...