ICEA Calls for Tariff Reductions to Boost India's Electronics Manufacturing

Ahead of the Union Budget, the India Cellular & Electronics Association (ICEA) has recommended reducing input tariffs to strengthen India's components ecosystem. ICEA's suggestion is based on a study that revealed high tariffs are limiting growth and reducing export competitiveness. ICEA proposes zero tariffs on certain components to attract global value chains and increase production scale.

Ahead of the Union Budget, the India Cellular & Electronics Association (ICEA) has issued a compelling recommendation: reduce input tariffs to fortify India's components ecosystem.

The proposal is rooted in a comprehensive 'tariff study' conducted across seven competing economies, including India.

ICEA's report, released on Tuesday, emphasized that high tariffs on inputs suppress the very growth engine necessary for higher production. These tariffs on inputs render exports uncompetitive, resulting in reduced final product production, specifically mobile phones. The solution, as per ICEA, lies in reducing input tariffs.

Furthermore, the report acknowledged the importance of developing a domestic supply chain but argued that protectionist high tariffs are not the way forward. Instead, ICEA calls for reducing disabilities, creating competitiveness, and implementing incentive schemes where necessary.

To attract global value chains (GVCs) and scale up production, ICEA recommended zero tariffs on significant cost-increasing tariff lines, including components of complex subassemblies. Additionally, they suggested removing the 2.5% tariff on sub-assembly parts and inputs.

These tariffs, according to ICEA, do not serve any constructive purpose. They fail to build a domestic industry while raising costs and compliance complexity for legitimate manufacturers.

ICEA also urged the government to provide appropriate policy and financial support to build a large-scale components and sub-assembly ecosystem, with longer gestation periods and incentive schemes.