Mobile handset import duty may be kept at 20% in budget

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SME Times News Bureau | 17 Dec, 2019
The government is unlikely to increase the basic customs duty on import of mobile handsets from 20 per cent in the upcoming budget, according to official sources. No proposal was under consideration to increase duty, said the sources.

The import of mobile phones (push button types) decreased to $400 million in 2018-19 from $935 million in 2019-18. Smartphone imports have also fallen from $2,602 million in 2017-18 to $1,216 million in 2018-19.

The production of mobile handsets has gone up from Rs 18,900 crore (six crore units) in 2014-15 to Rs 1,70,000 crore (29 crore units) in 2018-19, as per the commerce ministry figures.

Almost all foreign mobile phone makers -- Vivo, Oppo, Nokia, Samsung and Xiaomi -- have set up units in India and are manufacturing handsets and not just assembling.

According to Telecom Minister Ravi Shankar Prasad, Apple Inc, world'a largest and most advanced telecom tech firm, has started making its latest iPhone XR in India and is also expanding operations.

In the budget 2018-19, the basic customs duty was increased from 15 per cent to 20 per cent on cellular handsets.

Handset makers three years ago had suggested imposition of duties to thwart imports of electronic products, beginning from mobile phones to its components to help build local capacities to generate volumes and exports.

The government thus imposed basic customs duty of up to 15 per cent on imports of more than half a dozen components and 20 per cent duty on fully-made phones.

In the last few years, the tariff structure has been rationalised to promote domestic manufacturing of electronic goods, including cellular handsets. Specified capital goods for manufacture of mobile handsets are permitted for import at the zero duty.

To promote domestic value addition in mobile handsets and their sub-assemblies/parts manufacturing, a phased manufacturing programme was notified. As a result, India rapidly started attracting investments into this sector and significant manufacturing capacities have been created during the past four years.

The government has permitted 100 per cent FDI for manufacture of mobile handsets and their sub-assemblies/parts. The manufacturing of handsets and their parts/components has been steadily moving from semi-knocked down to completely knocked down level, thus increasing the domestic value-addition.