• UGI USER
  • Jul 05, 2024
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“INDUSTRY MINISTRY ADVOCATES LOWER IMPORT TARIFFS TO BOOST PLI BENEFITS”

Why in the news?

  • The Commerce and Industry Ministry is advocating for lower import tariffs on inputs for electronics and other sectors.
  • High tariffs are seen as negating the benefits of the Production Linked Incentive (PLI) scheme compared to competitors like China and Vietnam.

About Production Linked Incentive (PLI) Scheme:

  • Initiative: Started by the Government of India to boost the manufacturing sector.
  • Incentives: Provides performance-linked incentives on incremental sales from products manufactured in domestic units.
  • Objectives: Boost manufacturing and Reduce imports.
  • Investment: Announced Rs 1.97 lakh crore (US$ 28 billion) worth of PLI schemes in 2021 for 13 key sectors.
  • Implementation: Schemes are in various stages of implementation by the respective Ministries/Departments.
  • MSME Impact: Expected to have a cascading effect on the country’s Micro, Small & Medium Enterprises (MSME) ecosystem.
source:ipef
Key Points on Tariff

  • Tariffs are financial charges imposed at borders on goods between customs territories.
  • Import tariffs are more common than export tariffs.

Two types:

  • Ad valorem tariff: Calculated as a percentage of the imported good’s value.
  • Specific tariff: Based on a unit measure (e.g., weight).

Purposes:

  • Protect domestic industries.
  • Collect revenue.

Impacts:

  • Increases domestic prices of imported goods.
  • Benefits domestic producers and government.
  • Harms consumers and domestic producers using imported goods as inputs.

Associated Article:

https://universalinstitutions.com/production-linked-incentive-pli-scheme/#:~:text=About%20PLI%20Scheme,outlay%20of%20Rs%203%20trillion.

https://universalinstitutions.com/it-hardware-pli-scheme-2-0/