Government likely to impose customs duty on imported phones

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Buying an imported smartphone after the Goods and Services Tax (GST) is implemented in July could become a costly affair, with the government looking to levy customs duty on them. The move, aimed at boosting Prime Minister Narendra Modi’s ‘Make In India’ dream could result in a 5-10 per cent increase in the cost of imported smartphones.

Xiaomi-Redmi-Note
Xiaomi’s revenues from smartphone sales in India stood at over $1 billion, even as it looks to become the top brand in India.

With the number of companies looking towards India as a market for their smartphones increasing, the government feels a customs duty on imported phones could boost local production. Apple recently announced that it would assemble phones from its Bengaluru facility soon.

Another point the government is considering is the increasing presence of Chinese imports in the market. Four of the top five smartphone sellers in India last year were Chinese firms, relegating Indian companies to the bottom of the list.

Company Country Market share (as of February 2017)
Samsung South Korea 25.1%
Xiaomi China 10.7%
Lenovo China 9.9%
Oppo China 8.6%
Vivo China 7.6%

The government, however, is treading cautiously, for it doesn’t wish to violate norms under the Information Technology Agreement (ITA), under which signatory nations are mandated to permit duty-free imports of specific electronic goods. An inter-ministerial panel will look into different aspects to ensure that the customs duty doesn’t violate any ITA norms.

India had last year reduced the import duty on mobile phone components from 29.44 per cent to 12.5 per cent.

India’s imports of electronic goods stood at $45 billion last year, with a third of all phones in the country imported.

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