In a bid to boost its Make In India initiative, the Indian government may be looking to impose an additional 5-10% customs duty on imported mobile phones, reports The Economic Times. This will essentially drive up the cost of imported handsets, further pushing consumers to buy locally manufactured handsets.
As per the report, this customs duty implementation may happen after the roll-out of the ambitious Goods and Services Tax (GST). ET goes on to report that the Ministry of Electronics and Information Technology (MeITY) has taken a legal opinion from the Attorney General, who has cleared the fact that imposing customs duty on imported phones will not be in violation of the Information Technology Agreement (ITA), a pact that allows for duty-free imports from certain countries. Further, an inter-ministerial group consisting of representatives from various ministries including, Finance, IT, Telecom, and Commerce has been set up to examine the proposed tax.
India imports 30% of the phones sold in the country and the bulk of those imports comes from China. Given the government’s local manufacturing push, many smartphone makers such as Xiaomi, Gionee and Oneplus have started assembling phones in India. Next to join the Make In India bandwagon are Apple and China’s Oppo. While Apple plans to start assembling the iPhone SE in the country anytime soon, Oppo has planned to set up a local manufacturing hub in the country with an investment of Rs 100 crores.
Commenting on the report, President of the Consumer Electronics & Appliances Manufacturer Association (CEAMA) said, “MEITY’s initiative to impose an additional 5-10% custom duty on imported handsets is a welcoming step towards smartphone industry. It provides the necessary impetus at the same time motivates the local manufacturers to align themselves to governments ‘Make in India’ vision. Furthermore, it will boost the sentiments of the local players and provide a level playing field for all the manufacturers within the segment. The industry awaits on such positive stimulants to continue under the GST regime as well.”
If the said customs duty is imposed on imported handsets, companies like Samsung will most likely suffer its brunt as they will have to pass on the increased import costs to their customers. Apple’s flagship offerings will also become pricier as the company does not plan to manufacture or assemble them in India for now.
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