Hasty decision

With reference to “Importing worries” (December 20), the editorial has a justification in stating that raising customs duties has many downsides. The sudden and untimely duty hike on electronic items is going to add to the woes of the whole electronics industry. India is only just building a production base, and it has been dependent on China which exports electronic items ranging from components to telecom instruments to the tune of $42 billion a year. These cannot be indigenised by force in the name of “making in India” or hiking duties so steeply. We do not have a strong manufacturing base for these items such as China, Taiwan, Korea and even Thailand. As the editorial aptly pointed out, raising import duty is not the right solution to support the Make in India initiative.

The across the board doubling of customs duties, which seems to be a hasty decision, will adversely affect the whole manufacturing and retailing industry in the country. The government should instead reinstate the erstwhile Phased Manufacturing Programme to encourage indigenisation of electronic components, consumables, peripherals etc. and thus encourage the Make in India programme more effectively. Local vendor development has to be encouraged by the end manufacturing units by giving them necessary production and financial support. Further, one should not forget that we are still using screwdriver technology for most of the electronic products. The screw technology-based innumerable assembling units, spread all over India, cannot suddenly absorb the doubled customs duties and it will lead to job layoffs.

Further, the government’s intention cannot be fulfilled because there are other Open General Licence (OGL) routes available under free trade agreements with countries such as Taiwan, Korea and Thailand, besides China, for specified electronic components. Importers can use these routes to import where import duties are either nil or minimal. The move will only facilitate illicit or other fake routes to import these items. Alternatively, the government should have dug out a list of components, consumables and peripherals etc. that are manufactured in India adequately and place them under the import licensing mechanism, removing from the OGL. This could have proved to be more meaningful and purposeful.

A Sathyanarayana,  New Delhi

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