India-US Trade Agreement: A Catalyst for the Electronics Industry
Click to start listening
Synopsis
Industry leaders are hopeful for a well-structured Bilateral Trade Agreement between India and the US that could significantly boost the electronics sector, especially with potential zero duties on various electronics imports.
Key Takeaways
- Potential BTA could eliminate tariffs on electronics.
- Current 16.5 percent customs duty on US electronics.
- Long-term export growth forecast of 800 percent by 2030.
- India's semiconductor import duty is zero.
- Domestic semiconductor production is on the rise.
New Delhi, March 6 (NationPress) With the implementation of reciprocal tariffs by the US administration anticipated on April 2, industry leaders expressed their hope for a robust Bilateral Trade Agreement (BTA) that would benefit the electronics sector. Currently, India enforces a 16.5 percent basic customs duty (BCD) along with surcharges on electronics and smartphones imported from the US.
India is also developing a resilient domestic manufacturing ecosystem focusing on four key areas: infrastructure for a strong foundation, technology for modernization, skill development for a proficient workforce, and market access to stimulate demand and growth.
Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association (ICEA), stated that offering reciprocal zero duty in the forthcoming BTA for smartphones, hearables, wearables, color televisions, consumer electronics, and more, is not an unusual move, as similar terms are already extended to FTAs with Japan, Korea, and ASEAN countries like Vietnam, Thailand, and Indonesia.
He added that the long-term forecast remains positive, predicting an expansion of electronics exports to the US from the current $10 billion to $80 billion, marking an 800 percent increase by 2030.
In the short term, India is not expected to face significant repercussions due to the US tariff on semiconductors, as it does not heavily export chips to the US.
India's import duty on semiconductors is already zero, eliminating concerns over reciprocal tariffs, according to Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA).
Most of India's forthcoming semiconductor manufacturing and Outsourced Semiconductor Assembly and Test (OSAT) facilities are designed to meet the needs of global brands. Increasing domestic semiconductor demand will rely on locally produced chips, reducing reliance on imports.
In the long run, Indian semiconductor firms are not likely to face significant disadvantages, as the US tariff is expected to be uniformly applied to all exporting countries, noted Chandak.
