The government may slap customs duty on imported mobile phones after switching to the goods and services tax (GST) regime as it seeks to give a boost to local manufacturing, ward off Chinese imports and induce companies like Apple to make in India. Such a move could, however, increase the price of imported smartphones by 5-10 percent.
The ministry of electronics and information technology has secured legal opinion from the attorney-general who has said that imposing customs duty on phones will not violate the Information Technology Agreement (ITA), an international pact which mandates signatory countries to allow duty-free imports of certain electronics products.
An inter-ministerial committee, comprising representatives from the finance, commerce, and telecom and IT ministries, has been set up to examine the issue in detail.
These developments follow a growing thought in the government that zero customs duty is not helping the case of manufacturing in the country.
In addition, certain exemptions that are currently available to domestic handset makers — such as no countervailing duty on imported electronic components — will have to go after the GST regime comes into force. Imposition of customs duty will protect local manufacturers.
While the iPhone maker is set to assemble handsets in India at a plant in Karnataka being set up by its contract manufacturer Wistron, it has demanded several tax concessions. The government’s stated position is that it will not give special concessions to any single company.
Experts opined electronic manufacturing needs to be incentivised.
By Baishakhi Dutta
