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Electronics Goods Set for Huge Tariff Hikes

The ever growing electronics sector has once again come into the limelight with the revised policy of India’s annual budget 2021.


electronicsThe sector has become the biggest targets of India’s tariff hikes after duty revisions in the Budget, while China could be the worst-hit trade partner, a Mint analysis shows India’s latest budget, tabled in Parliament on 1 February, came with a fresh set of tariff hikes.


Coming after months of the ‘Atmanirbhar Bharat’ push, the hikes inevitably lent steam to India’s increasingly protectionist image. A sectoral analysis shows that the electronics goods sector, which depends heavily on China, continued to be among the biggest targets of India’s tariffs this year.


The scheme, which Sitharaman mentioned in her Budget speech, intends to promote exports in 13 key sectors, with an outlay of ₹1.97 trillion over five years.


In her speech, Sitharaman said India’s customs policy should have the “twin objective” of “promoting domestic manufacturing and helping India get onto global value chain and export well”. But experts say the manner of achieving this self-reliance—or atmanirbharta—will matter far more than the goal itself. “It is less about being protectionist, as every country is being so in times like these when the global boom is far and unemployment a big worry,” said Pant. “It’s more about how to go about it.”


Effective 2 February, the government raised duties on about 1,250 of the 10,400-odd items on India’s customs list. These items made up $75.8 billion worth of imports in 2019-20, a Mint analysis shows.


The extent is lower than the 2020 budget when nearly 1,600 items saw raised duties, but it was not enough to change the look-inwards perception India is fast developing in global trade.


Almost 68% of the import value of these items came from the electronics, mechanical and electrical items list in 2019-20.


Most of such hikes were on mobile phone parts, ranging from wires, printed circuit boards, connectors and cameras to molding plastics for chargers or adapters. The duty rate in these sectors increased from zero to 2.5% in most cases, and to 10% or 15% in the rest.


Saon Ray, a senior fellow at the Indian Council for Research on International Economic Relations, saw this as a way to generate revenue as electronics occupies a large portion of imports while encouraging domestic production in the sector. But the hikes did not go down well with the Indian Cellular and Electronics Association, the apex industry body in mobiles and electronics. The association called it “a big setback” in a letter to the ministry of electronics and information technology.


Plastics and rubbers were the second largest set of items to see tariffs. Renewables such as solar lamps and inverters are also featured on the list.


India’s stance may not be unexpected, coming soon after a pandemic disrupted global supply chains and caught the indigenous sector unawares. But only time will tell how far the tariff revisions and the incentive scheme succeed in achieving the twin objectives Sitharaman talked about.


Aishwarya Saxena

A book geek, with creative mind, an electronics degree, and zealous for writing.Creativity is the one thing in her opinion which drove her to enter into editing field. Allured towards south Indian cuisine and culture, love to discover new cultures and their customs. Relishes in discovering new music genres.

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