Reduce tariffs on manufacturing inputs for electronics: ICEA

The domestic electronics manufacturers’ association said that competing with global leaders like China and Vietnam demanded lower tariffs on components

The Indian Cellular & Electronics Association (ICEA), which represents domestic electronics manufacturers, called on Tuesday for a reduction of import duties as a key Union budget demand. “With a sustained increase in production with the help of supportive policies, including the PLI, India now has entered a phase when the growth of the mobile phone sector depends not on domestic demand but on demand in the global market,” the ICEA said in a report prepared for the Finance Ministry.

Pankaj Mohindroo, the ICEA’s President, argued against the relatively high tariffs India imposes on manufacturing inputs — China and Vietnam’s tariffs apply on fewer components and are of lower rates — saying that domestic component makers were increasing prices to just below the net prices of inputs to take advantage of the situation. “Global suppliers also consider the higher domestic price as their reference price in their negotiations with exporters because their imported inputs are duty-free for exports,” the ICEA report said.

These tariffs, Mr. Mohindroo said, were compounded by customs authorities hindering orderly shipments of key components, likening the situation to an imported shirt being held back on account of higher duties on buttons. 

Since much of the fresh production of phones in India is being exported, Mr. Mohindroo said, duties should be slashed to promote competitiveness of Indian assembly and manufacturing operations with the main other leaders in the sector, China and Vietnam. “Current high tariffs increase manufacturing costs in India by 7–7.5% on the bill of materials,” Mr. Mohindroo said.