Big smartphone brands such as Apple and Nokia have been trying to establish private manufacturing units in India, with the hope of selling India-made products at a cheaper price. However, the government doesn’t appear to be giving in to their demands. Adding to that, the former is even expected to slap a higher custom duty on imported mobile phones after switching to the Good and Services Tax regime (GST) with the intention to boost local manufacturing. This move is expected to increase the price of imported smartphones by at least 5 to 10 per cent.
According to Economic Times, 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.
A committee comprising of representatives from the finance, commerce, telecomm and IT ministries has been set up in order to address the prevailing issue in detail. The inter-ministerial committee appears to be of the opinion that a zero-customs duty is not something that will help the case of manufacturing in the country. Additionally, certain exemptions available to domestic handset makers such as no countervailing duty on imported electronic components will also be demolished after the GST regime comes into force. Even though the decision is not final, the growing thought is prevalent to be protecting local manufacturers.
At the moment, 30 per cent of all smartphones sold in India are imported — most of which come from China. Apple is among those foreign smartphone makers that demanded several tax concessions post the establishment of their manufacturing plant in Karnataka earlier this year. However, the government denied the same, stating that they will not give any special concessions to any single company.
