Imported smartphones may get costlier by 5-10% as govt plans to levy customs duty

In an effort to make manufacturing the engine of growth and employment, India is pushing for Make in India products. The government is now contemplating to levy customs duty on imported mobile phones after the roll-out of Goods and Services Tax (GST), reports The Economic Times.

The move is aimed at giving teeth to local manufacturing and encourage companies like Apple to make phones in the country. However, this may lead to rise in prices of imported smartphones by 5-10 percent.

Domestic handset makers are already enjoying few exemptions like no countervailing duty on imported electronic components but they will not remain in the picture once GST is implemented.

Government is arguing that no customs duty will not help the Make in India case hence, the imposition of import duty is essential.

The ministry of electronics and information technology is ensuring that charging customs duty will not flout the Information Technology Agreement (ITA), an international pact which mandates signatory countries to allow duty-free imports of certain electronics products. It is also seeking legal opinion from the attorney-general.

An official from the ministry said that not all phones are covered under ITA and the government concurs the same. Also, to analyse the issue an inter-ministerial committee, comprising representatives from the finance, commerce, and telecom and IT ministries, has been set up.

After many discussions for collaboration with Apple, India gave a go ahead to the i-Phone maker to assemble phones in India in February. This makes India the third country globally to produce Apple phones.