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‘Electronics producers uncompetitive due to high import tariffs’

The ICEA said that while China, Vietnam, Mexico and Thailand had focussed on attracting foreign direct investment, improving domestic capabilities and exports, India had one major difference in policy when it came to tariff.

By: ENS Economic Bureau | New Delhi |
January 18, 2022 12:14:03 am
Since 2019, India has introduced a host of PLI schemes aimed at improving the domestic production of electronic components such as mobile phones, chargers, light emitting diodes (LED), liquid crystal display and LED panels. (Representational)

India’s policy of keeping high tariff on import of electronic components to protect the domestic industries is proving counterproductive to its plans such as Production Linked Incentive (PLI) scheme and making the Indian electronics manufacturing industry uncompetitive compared to other electronics manufacturing nations, the Indian Cellular and Electronics Association (ICEA) said in a report.

Comparing the performance of the India to other countries such as China, Vietnam, Mexico and Thailand, which were the major gainers of electronic products export over the last 20 years, the ICEA said that while all of them had focussed on attracting foreign direct investment, improving domestic capabilities and exports, India had one major difference in policy when it came to tariff.

“The main difference in their policy approach is the tariff policy of India compared to others. India has relied heavily on higher tariffs whereas other countries have not done so. Higher tariffs orient the approach of investors and domestic producers away from global markets and towards the domestic market. Notably, the exports for India compared with others have remained low as has been examined in this report,” the report said.

Since 2019, India has introduced a host of PLI schemes aimed at improving the domestic production of electronic components such as mobile phones, chargers, light emitting diodes (LED), liquid crystal display and LED panels, as well as allied components such as charger pins, vibrators for mobile phones, front and back panels among others. The latest in the series of incentives for electronic components is the Rs 76,000-crore scheme aimed at encouraging production of semiconductor chips in the country.

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However, the last two Budgets have increased tariff and Customs duty on mobile phones and some of their parts between 15 and 20 per cent, which, ICEA noted, proves to be harmful in the long run for the domestic industry.

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