CEAMA PwC report recommends subsidies for locally produced goods and incentives for R&D focused on boosting local capacity for component production
A report by Consumer Electronics and Appliances Manufacturers Association (CEAMA) and UK-based PricewaterhouseCoopers (PwC) has suggested that the government should consider excluding appliances and consumer electronics (ACE) products from free trade agreements (FTAs) that India will be signing in the future. The report views the move will help increase local manufacturing and exports.
It has asked to continue with the import duties on ACE products under the proposed mega trade deal Regional Comprehensive Economic Partnership (RCEP). The report has brought out the suggestions to boost the ‘Make in India’ initiative.
Reduction in local manufacturing
CEAMA says that ACE has seen a flat growth in the first half of this fiscal due to the falling rupee value. It stated that FTAs signed by India were with production-driven economies that resulted in importing the finished products from those countries at a lower cost than what it would have taken to manufacture the same products locally. The components of the finished goods are then subject to higher import rates in comparison to the rates applicable to finished products. As a result, FTAs have cast a negative effect on the Make in India concept by bringing down the pace of local manufacturing.
Local goods should be subsidised
The port has suggested that locally produced goods be subsidised to support them while competing with the imported ones under the current FTA. The whole idea should be focused on promoting exports and boosting local production. It has further opined that research and development dedicated to building domestic capacity to produce components that are unavailable in India should be incentivised.
The CEAMA-PwC report has made recommendations to include ACE as a single category under Goods and Services Tax (GST) to ensure uniformity and offer incentives in the form of subsidies to consumers.
An FTA requires a country to gradually reduce and eventually eliminate tariff rates on the other country’s goods, which also include electronic goods as per a pre-decided timeline for implementation. India has signed FTAs with countries such as Singapore, Thailand, and ASEAN.