The Indian government is planning to rationalize tariffs on inputs and sub-components used in the production of electronics goods to boost local manufacturing and exports. According to Rajeev Chandrasekhar, the Minister of Electronics and Information Technology, discussions have been taking place between the ministry and the revenue department under the Ministry of Finance to review import duties on these components.
Chandrasekhar emphasized the need to reform tariffs as the Indian economy transitions from manufacturing for local demand to a manufacturing-for-global-demand model. He expects a relook at tariff structures in the coming months to make it easier and more competitive for exports. However, he acknowledged the ministry’s responsibility to convince the revenue department that the growth in exports from India is sustainable and will continue to increase.
The electronics industry in India has been advocating for the rationalization of tariffs to reduce disadvantages and improve competitiveness against countries like Vietnam, Mexico, Thailand, and China. A recent report by the Indian Cellular and Electronics Association highlighted that India’s tariffs were higher for up to 98% of the non-zero tariff lines compared to Vietnam. In addition, the report noted that Vietnam has a significantly lower average tariff, mainly due to its free trade agreements with other countries.
To achieve India’s goal of reaching $300 billion in electronics production by 2025-26, including $120 billion in exports, the industry has called for a reduction in the number of tariff tiers from six to three. This reduction would not only support domestic manufacturing but also reduce arbitrage and minimize disputes.
Overall, the rationalization of tariffs on electronics components is seen as a crucial step in promoting the growth of the electronics industry in India and boosting its exports to international markets.
– Rajeev Chandrasekhar, Minister of Electronics and Information Technology
– Indian Cellular and Electronics Association