Revamping India’s Electronics Tax Structure: NITI Aayog’s Key Recommendations

NITI Aayog's latest report advocates rationalising India's direct and indirect tax structures for the electronics sector to reduce production costs and enhance global competitiveness. It highlights the need for diverse fiscal incentives and the development of large-scale electronics manufacturing clusters, while addressing high tariffs and reliance on imports for components.

NITI Aayog has called for a comprehensive revision of India's direct and indirect tax structures within the electronics sector. In its report, 'Electronics: Powering India's Participation in Global Value Chains', the think tank suggests various fiscal, financial, regulatory, and infrastructure improvements to lower production costs and compete internationally.

The report advances the need for categorised fiscal incentives: opex support for scaling simpler manufacturing, capex for complex components, and hybrid support. Additionally, it recommends a thorough audit of existing electronics manufacturing clusters and the development of new large-scale clusters.

Highlighting high tariffs as a barrier to global competitiveness, the report also acknowledges India's strides in final assembly and sub-assembly of electronics, notably smartphones. Despite these advancements, the country remains dependent on imports for components manufacturing and design capabilities.

(With inputs from agencies.)