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Tuesday, July 23, 2024

CII urges reevaluation of trade relations with China

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In Short:

CII has called for a review of trade ties with China due to India’s reliance on electronics components imports, posing a risk to domestic manufacturing. They suggested fiscal support for manufacturing components, import tariff rationalization, and a non-restrictive approach towards investments and technology transfer. Escalating tensions with China have led to significant production losses and job cuts in the electronics industry. India aims to manufacture $300 billion of electronic products by 2026.

Call for Review of Trade Ties with China by CII

New Delhi: The Confederation of Indian Industry (CII) has urged for a review of trade ties with China, highlighting the risks associated with India’s dependence on electronics components imports. According to a report by CII, the country’s reliance on imported electronics components could jeopardize the long-term sustainability of the domestic manufacturing ecosystem.

Recommendations by CII

CII suggested a review of press note 3, which imposes stricter scrutiny on investments from countries sharing a border with India, along with the introduction of adequate safeguards. The industry body emphasized the need for transitioning to component-level value-added manufacturing in the electronics industry.

To address the challenges, CII proposed the implementation of fiscal support schemes for select components and sub-assemblies, along with the introduction of a scheme for promoting manufacturing of electronics components and semiconductors (SPECS) 2.0.

Impact of Tensions with China

The escalating tensions with China have reportedly resulted in $15 billion in production losses and the loss of 100,000 jobs for Indian electronics manufacturers over the past four years. This has also led to delays in issuing visas to Chinese executives, hindering the expansion plans of the Indian electronics manufacturing industry.

Future Outlook

India aims to manufacture $300 billion of electronic products by 2026 and $500 billion by 2030, which will drive the demand for electronic components. The report underlined the need to aggressively pursue free trade agreements with various countries to boost the electronics manufacturing sector.

Key Components and Sub-Assemblies

The report identified high-priority components such as batteries, camera modules, mechanicals, displays, and PCBs that account for a significant portion of the demand and stressed the importance of reducing import dependency in these areas.

Addressing Cost Disparities

The report also highlighted the cost competitiveness challenges faced by India compared to other economies like China, Vietnam, and Mexico. It emphasized the need to address these cost disabilities to enhance India’s competitiveness in electronics manufacturing.

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