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Govt think tank opposes participation in WTO’s ITA 2 to reduce tariffs on electronics imports

A dismantled camera showing different electronic parts

The World Trade Organisation’s Information Technology Agreement in the 1990s prohibited tariffs on several electronics imports for IT products. India participated in that deal, but seems opposed to join its successor, dubbed the ITA 2, if a policy brief prepared by the state-backed Centre for WTO Studies is any indication. The Economic Times first reported the brief. The brief essentially argues that there is little data to show that the original IT Agreement did anything to improve the Indian IT sector’s position, even with value addition on imports.

ITA 2 would extend tariff prohibitions on imports like semiconductors and video game consoles, products that India has no realistic prospects of manufacturing. As such, these products draw significant tariffs, something that the Centre for WTO Studies called a crucial source of revenue. “Any binding commitments will erode the much-needed policy space and reduce the ability of the governments to generate additional revenues,” the brief said.

A post on the Department of Commerce’s website from August 2020 is much more incisive, and provides a strong indication that the government is unlikely to budge on tariffs for high value electronic imports anytime soon:

“India’s experience with the ITA has been most discouraging, which almost wiped out the IT industry from India. The real gainer from that agreement has been China which raised its global market share from 2% to 14% between 2000-2011.

In light of recent measures taken by the Government to build a sound manufacturing environment in the field of Electronics and Information Technology, this is the time for us to incubate our industry rather than expose it to undue pressures of competition. Accordingly and also keeping in view opinion of domestic IT industry, it has been decided not to participate in the ITA expansion negotiations for the time being.” — Department of Commerce

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