Sunday, October 13, 2013: In order to promote domestic manufacturing of information technology (IT) products and cut down the dependency of India on import, the government may soon start imposing customs duty up to 17.5 per cent. This will be imposed on certain wireless telecommunication equipment that are used for third and fourth generation mobile networks.
India is a signatory to the first Information Technology Agreement (ITA-1) under the World Trade Organisation, under which customs duty was abolished on many technology products, reported Live Mint.
The finance ministry has however said that the government feels that certain telecommunication equipment was not a part of the agreement and duty can be imposed on these.
According to experts, while India may circumvent the ITA-1 restrictions, imposing customs duty on these products can lead to hike in telecom rates for customers while doing less to promote domestic manufacturing for now at least.
In a meeting held in the finance ministry in September, the IT department suggested the imposition of 10-12 per cent customs duty to encourage domestic manufacturing of such equipment, according to the Mint report.
However, the telecom department said the commitment under the WTO should not be breached and the products should be carefully chosen to levy duty. Also, it is concerned that imposing higher custom duty on telecom equipment may increase push up call rates, affecting end consumers.
The commerce department said in the meeting that the IT products identified by the inter-ministerial sub-committee did not exist in 1997 when India signed ITA-1 and, therefore, customs duty could be imposed on these products without any fear of retaliatory measures. It suggested that duty on such products be imposed at 17.5 per cent, the report further added.
