New Delhi, Jan 23 (KNN) A report by the Global Trade Research Initiative (GTRI) has urged the Indian government to refrain from reducing import duties on electronic components used in smartphone manufacturing in the upcoming Budget.

The GTRI argues that the existing tariff structure, ranging from 7.5 per cent to 10 per cent, has proven successful and altering it could negatively impact local manufacturing.

GTRI Co-Founder Ajay Srivastava emphasised that while Indian manufacturers should pay duties for smartphones sold within the country, exports should be exempt.

GTRI's recommendation stands in contrast to the India Cellular and Electronics Association's (ICEA) demand for duty cuts, asserting that it could lead to a 28 per cent increase in domestic production, reaching USD 82 billion, and support indigenous manufacturing.

The report highlights the success of the Production Linked Incentive (PLI) scheme, with India's smartphone industry witnessing a substantial increase in exports from USD 7.2 billion in 2022 to USD 13.9 billion in 2023.

The report also raises concerns that reducing import duties might encourage short-term assembly operations relying on imported parts, which could vanish once government incentives end.

GTRI argues that maintaining current tariffs is crucial for sustaining the growth and depth of India's smartphone manufacturing sector.

Srivastava warns against the potential rise of superficial assembly plants that contribute little to the local economy and may disappear once government incentives cease.

The report notes a 25.5 per cent growth in the import bill of electronic components, suggesting a significant reliance on imported parts in local manufacturing.

GTRI states that the decision to maintain current import tariffs on smartphone components is not just a fiscal policy but a strategic move towards sustainable economic growth, preserving the success and future potential of India's smartphone manufacturing industry.

The Union Budget, scheduled for February 1, will be closely watched for its stance on these import duties.

(KNN Bureau)