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Home appliances and consumer electronics (ACE) should be excluded from the scope of free trade agreements in order to boost domestic manufacturing and promote exports, a report suggested.

He called on the government not to reduce or eliminate import tariffs in this sector as part of the mega trade deal proposed for the Regional Comprehensive Economic Partnership (RCEP).

A report by PwC and CEAMA called on the government to “consider excluding ACE products from future FTAs, especially RCEP.”

India has signed FTAs ​​with several countries such as Singapore, Thailand and ASEAN.

Under an FTA, each country is required to gradually reduce and eventually eliminate the tariff rates on the other country’s products, which also include electronic products according to a predetermined implementation schedule.

According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the ACE sector has experienced flat growth in the first half of the current fiscal year due to the devaluation of the Indian rupee and other factors.

The report said: “The FTAs ​​signed by India are about production-oriented economies, resulting in the importation of finished products from these countries into India at a cost lower than it would have cost to manufacture the same ones. produced in India. “

“This factor combined with the fact that in most cases the components of finished products are subject to import duties at rates higher than the rates applicable on finished products, the FTA has contributed to the decline in the manufacturing of products. in India.”

The report also suggested granting subsidies to locally produced goods to help them compete with fully finished goods imported at zero duty under the current free trade agreement.

India should focus on signing FTAs ​​with consumer-oriented economies to promote exports and focus on “Make in India” for the world, according to the report.

He suggested treating the entire consumer electronics segment as a single category under the GST to ensure uniformity of the GST rate and to provide incentives in the form of subsidies to consumers for encourage them to switch to higher rated energy efficient appliances.

The report also recommended encouraging R&D undertaken in India to strengthen domestic capacity to manufacture components that are currently not available in India.

“Some durable consumer goods are also considered luxury goods from a GST point of view. With changing lifestyles and consumer aspirations, these products have now become a necessity that justifies re-structuring and tax rates, “he added.

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