India to US: Can’t remove customs duty on telecom gear; it will put unbearable stress on economy

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Published: November 21, 2018 2:51:34 PM

In the financial year 2017-18, India's imports from these seven products stood at $20.44 billion, of which imports from the US were reported at $415.26 million.

The US government has been demanding to remove customs duties on certain ICT products to increase trade of these products in the global markets.

The government has told the US that it’s challenging to remove customs duty on import of telecommunication equipment, since it will hurt a low-income nation such as India, especially in the current difficult economic scenario ridden with mounting current account deficit and sharp rupee depreciation. The US government has been asking India to remove customs duties on certain information and communications technology (ICT) products to increase trade of these products.

The customs duties removal on seven products that the US is demanding will put “disproportionate and unbearable stress” on a low-income nation like India, the government has said, according to a report by The Indian Express.

The report said that the Indian government has told the US that eliminating duties on certain telecom network equipment and products such as smartwatches, high-end mobile phones costing over Rs 10,000 and some mobile phone parts, among others, is not going to benefit the US. However, it will make it difficult for India to consider the revenue loss arising out from it.

In the financial year 2017-18, imports of India from these seven products stood at $20.44 billion, of which imports from the US were $415.26 million. The highest chunk of imports was from the neighbouring nation China at $15.03 billion, followed by Vietnam ($905.51 million) and South Korea ($847.73 million), respectively.

In order to keep the increasing CAD and falling rupee in check, the Indian government last month raised basic customs duties on several mainline telecom network products. It also introduced fresh duties on printed circuit board assemblies. At present, there is an import duty of 20% on products such as optical transport gear, base stations, IP radios, VoIP phones, MIMO/4G LTE products, among others. Besides, import of printed circuit board assemblies that are used for these products fetches 10% duty.

In April 2017, the government has announced a phased manufacturing plan to give a boost to domestic mobile phones production by introducing import duties on products. During the financial year 2016-17, the planned import duties were introduced on products including charger/adapter, keypad, battery pack and wired headset; on microphone and receiver and USB cable in fiscal 2017-18; on printed circuit board assembly, camera module and connectors in financial year 2018-19, while duties are to be imposed on products such as display assembly, vibrator motor and touch panel in 2019-20.

Apart from the US, other countries such as Japan, Canada, China, European and Norway also planned to raise concerns on the customs duties by India on ICT products at the World Trade Organisation (WTO) earlier this month, media reports showed.

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