News
October 06, 2025
What ails India’s electronics sector
India’s tryst with WTO’s ITA reveals that tariff cuts weren’t accompanied by strengthening of domestic manufacturing, leading to import dependence
**India's Electronics Sector Faces Hurdles After WTO's ITA Agreement**
New Delhi – India's ambition to become a global electronics manufacturing hub is facing significant challenges, stemming from the country's participation in the World Trade Organization's Information Technology Agreement (ITA). While the ITA aimed to boost global trade in electronics by eliminating tariffs, a closer look at India's experience reveals a more complex picture. The expected boom in domestic manufacturing hasn't materialized as anticipated, leading to a concerning over-reliance on imports.
The ITA, designed to foster a level playing field, mandated tariff reductions on a wide range of electronic goods. The intention was to encourage Indian companies to compete globally and attract foreign investment. However, the reality on the ground has been different. Instead of strengthening domestic production, the tariff cuts appear to have primarily facilitated a surge in imports, particularly from countries with already established electronics manufacturing ecosystems.
Experts point to several factors contributing to this outcome. One key aspect is the lack of a corresponding strengthening of India's domestic manufacturing capabilities before and after the implementation of the ITA commitments. This includes investments in research and development, infrastructure upgrades, and skills development within the local workforce. Without these crucial elements in place, Indian companies struggled to compete with the cheaper and often technologically superior imports flooding the market.
The consequences of this import dependence are far-reaching. It not only hampers the growth of the domestic electronics industry but also impacts job creation and contributes to the country's trade deficit. Furthermore, relying heavily on imports makes India vulnerable to global supply chain disruptions and fluctuations in international prices.
The situation calls for a re-evaluation of India's approach to electronics manufacturing. Policymakers need to focus on creating a conducive environment for domestic companies to thrive. This includes providing incentives for local manufacturing, streamlining regulations, investing in technological upgrades, and fostering a robust ecosystem of component suppliers. Building a strong and self-reliant electronics sector is crucial for India's economic growth and its aspirations to become a global economic powerhouse. A renewed focus on supporting local manufacturers and fostering innovation will be essential to ensure India benefits fully from the opportunities presented by the global electronics market.
New Delhi – India's ambition to become a global electronics manufacturing hub is facing significant challenges, stemming from the country's participation in the World Trade Organization's Information Technology Agreement (ITA). While the ITA aimed to boost global trade in electronics by eliminating tariffs, a closer look at India's experience reveals a more complex picture. The expected boom in domestic manufacturing hasn't materialized as anticipated, leading to a concerning over-reliance on imports.
The ITA, designed to foster a level playing field, mandated tariff reductions on a wide range of electronic goods. The intention was to encourage Indian companies to compete globally and attract foreign investment. However, the reality on the ground has been different. Instead of strengthening domestic production, the tariff cuts appear to have primarily facilitated a surge in imports, particularly from countries with already established electronics manufacturing ecosystems.
Experts point to several factors contributing to this outcome. One key aspect is the lack of a corresponding strengthening of India's domestic manufacturing capabilities before and after the implementation of the ITA commitments. This includes investments in research and development, infrastructure upgrades, and skills development within the local workforce. Without these crucial elements in place, Indian companies struggled to compete with the cheaper and often technologically superior imports flooding the market.
The consequences of this import dependence are far-reaching. It not only hampers the growth of the domestic electronics industry but also impacts job creation and contributes to the country's trade deficit. Furthermore, relying heavily on imports makes India vulnerable to global supply chain disruptions and fluctuations in international prices.
The situation calls for a re-evaluation of India's approach to electronics manufacturing. Policymakers need to focus on creating a conducive environment for domestic companies to thrive. This includes providing incentives for local manufacturing, streamlining regulations, investing in technological upgrades, and fostering a robust ecosystem of component suppliers. Building a strong and self-reliant electronics sector is crucial for India's economic growth and its aspirations to become a global economic powerhouse. A renewed focus on supporting local manufacturers and fostering innovation will be essential to ensure India benefits fully from the opportunities presented by the global electronics market.
Category:
Politics