Commerce ministry & MeitY at odds over tariff sops to ICT goods from EU

New Delhi: The ministries of commerce and industry, and electronics and information technology (MeitY) have a face off on the issue of giving tariff concessions to the information and communication technology (ICT) goods coming from the European Union.

While the commerce department has favoured duty concessions under the proposed bilateral free trade pact with the EU, MeitY has opposed any such move citing it to be detrimental to the country's aim to become a manufacturing hub and production-linked incentive (PLI) schemes rolled out for the tech sector to reduce dependence on China. "Commerce department has discussed with MeitY that concessions can be considered for the EU but the latter has reservations," said an official.

The issue of India losing a dispute to the EU at the World Trade Organization (WTO) has also come up in the bilateral trade talks. "It is being discussed with EU in the trade talks though the two aren't linked," said the official. The WTO has given time till September 19 to the two sides to reach a solution on a dispute on India's import duty of 7.5%-later increased to 15%- on mobile phones and electronic components, among other ICT goods.

India imported $7.54 billion of smartphones, microphones, headphones and optical media from the EU in FY23 and the inbound shipments have already touched $1.8 billion in April-May FY24. Sources in the ministry of electronics and information technology said that giving concessions to EU nations on ICT goods would be detrimental to the smaller domestic companies, some of which have also benefitted from the PLI schemes. "After all these years, these companies have gained some competitiveness on the global scale. Any concessions right now would mean that there is a possibility of dumping of ICT goods, which would have a negative impact on the smaller players here," a senior government official said. The ministry may consider a renegotiation of these concessions once the tenure of some of the major PLI schemes end, another official said.