Context: Trade protectionist policies should have a sunset clause in order to incentivize innovation and competitiveness.
Negative Effect of Trade Protectionism:
On Firms: Artificial value addition behind the tariff wall enriches a few, and provides no incentive to innovate and reducing competitivities globally.
On Citizens: Citizens end up paying more due to high cost domestically and overall reduced choices.
Recent Steps Taken:
Production Linked Incentive Scheme: Envisages export of the bulk of electronics production worth over Rs10.5 lakh crore; It would help reduce electronic import which is rapidly increasing.
Sunset clause on import of electronics: High Import tariff on electronics like mobile phones and TVs has a sunset clause after five years.
Way Ahead:
Achieve technological autonomy: with innovative industrial and technology policies, and not be held hostage as Huawei currently is, by US sanctions.
Build competitive advantage in high-end semiconductors and chip design.
Coherent policy incentives for start-ups and academia-industry incubators will cause technology spillovers in microelectronic hardware by integrating artificial intelligence into it.