The findings showed that for India to integrate into global supply chains, its tariffs on inputs should at least match or be less than that of its competitors
Despite numerous steps taken by the Centre to boost electronics manufacturing in the country, import tariffs in India are still higher when compared to other countries. This is nulling the effect of the various PLIs by the government and is adversely affectively competitiveness and scale, as per a report by industry body India Cellular and Electronics Association (ICEA).
In the report, which was done in collaboration with IKDHVAJ Advisers LLP, the body concluded that import tariffs continue to be higher than those of China, Vietnam, Thailand and Mexico.
India’s higher tariffs are even more evident for the 120 priority products identified by the electronics industry. These imports constitute 80 per cent of the cost of mobile phones – India’s largest produce out of the USD 75 billion electronics sector.
The study highlighted that India has zero tariffs on 32 of the 120 tariff lines, while other countries have more zero tariffs – ranging from 53 (China) to 74 lines (Mexico).
For non-zero tariffs, India’s tariffs are higher for 85 per cent (Thailand, Vietnam) to 95 per cent (China) of these tariff lines. The higher tariffs negate the support provided through PLI schemes.
“Further, levying tariffs for revenue purposes is counterproductive because of GST losses due to lower output and imports,” said the study.
However, there is no tariff line for inputs (components and sub-assemblies) for which India’s import duty is lower than the competing economies, showing relatively higher production costs in India than the four economies, as per the report.
The findings showed that for India to integrate into global supply chains, its tariffs on inputs should at least match or be less than that of its competitors.
“A $300 billion manufacturing target by 2026 requires stability and prior consultation before finalising tariffs. Tariffs go to the core of competitiveness and scale. For Union Budget 2022-23, we request the government to review all tariffs on inputs for PLI schemes and reduce tariffs in areas where there is no local capacity”, said Pankaj Mohindroo, Chairman, ICEA.