GTRI Calls for Sustained Import Tariffs on Smartphone Components Ahead of Budget 2024-25

Economic think tank GTRI advises against cutting import duties on smartphone components in the upcoming budget. The organization argues that maintaining tariffs supports local manufacturing and long-term growth in India's smartphone sector. Current policies have resulted in significant production and export growth, driven by PLI incentives and tariff schemes.

The Global Trade Research Initiative (GTRI) urged the government on Monday to refrain from reducing import duties on smartphone components in the upcoming Budget 2024-25. The think tank warns that lowering these tariffs could lead to an increase in superficial assembly plants dependent on imported parts, thus contributing minimally to the local economy.

Finance Minister Nirmala Sitharaman is set to present the Union Budget for 2024-25 tomorrow. According to GTRI Founder Ajay Srivastava, removing tariffs would impact India's smartphone manufacturing sector by encouraging short-term assembly operations over long-term, valuable manufacturing. Currently, import tariffs on smartphones stand at 20 percent, while those on components range from 0 to 20 percent.

In FY24, India's smartphone production crossed USD 49 billion, with exports growing by 42 percent to USD 15.57 billion. Policies like the Production Linked Incentive (PLI) scheme have driven this success, offering cash incentives on annual incremental production. GTRI emphasizes the need to maintain existing tariffs to preserve the sector's growth and depth.