The government has imposed a 10 per cent basic customs duty (BCD) on imported fully built base stations but has kept parts used for making them outside the duty ambit, all aimed at giving a leg up to local manufacturing and the larger objective of Make in India.
Telecom service providers that typically bear cost of imports of telecom gear decried the move saying it would potentially ‘break the back’ of the industry already reeling under a debt of Rs 5 lakh crore. However, Telecom Equipment Manufacturer’s Association (TEMA) welcomed the move as it would give a fillip to local manufacturing.
Duty change, which has come into effect from July 1, makes imported base stations – used for relaying voice calls and data packets between towers – expensive by 10 per cent compared to those manufactured locally, in effect giving a duty differential incentivising indigenous assembly or production, under the purview of goods and services tax (GST) regime, the same way as done for imported smartphones.
The government said that it was ‘satisfied that the import duty leviable’ on telecom transmission equipment, specifically telephone sets and base stations, ‘should be increased and that circumstances exist which render it necessary to take immediate action’, in notices issued by the Central Board of Excise and Customs, on June 30. According to government officials, the decision was taken after holding consultations with the industry and stakeholders through an inter-ministerial committee (IMC) which was also taking the call on imposing duty in mobile phones, again to protect investments into local manufacturing.
Gear makers Huawei and Nokia said that they were ‘studying and evaluating implication currently’, and expected more clarity in coming days. Earlier, a 10 per cent levy was imposed only 4G or LTE base stations, but the new notification encompasses all base stations, without differentiating between 2G, 3G or 4G. Increase in customs duty is set to make network rollouts costlier as more than 90 per cent of telecom equipment including base stations is imported, as per industry data.
By Baishakhi Dutta
