Impact of Tariff Cuts on India's Smartphone Manufacturing Ecosystem

The Global Trade Research Initiative warns that reducing customs duties on smartphone components could harm India's local manufacturing, discourage investment, and lead to job losses. It advises enhancing component hubs near ports to support self-reliance and sustain the ecosystem's development.

The Global Trade Research Initiative (GTRI) has issued a warning against any potential reduction in customs duties on smartphone components in the forthcoming budget. The think tank contends that such a move could disrupt India's local component ecosystem, discourage new investments, and increase reliance on imports, potentially leading to job losses.

India's smartphone industry has emerged as a 'Make in India' success, with production volumes hitting USD 49.2 billion for 2023-24, becoming the fourth-largest export sector after diesel, aviation fuel, and polished diamonds. Despite the industry's robust growth, some groups are advocating for import tariff reductions in the next fiscal year's budget.

GTRI founder Ajay Srivastava emphasized avoiding tariff cuts, recommending instead the establishment of component hubs to alleviate import delays and warehousing expenses. This strategy mirrors those used successfully by countries like Vietnam and China to strengthen local manufacturing. GTRI highlighted that recent tariff reductions from 15% to 10% have already intensified the need to bolster the developing local ecosystem.

(With inputs from agencies.)