Premium Smartphone Makers Seek Cap On Basic Customs Duty At Rs 4000

Mobile phone handset manufacturers’ body India Cellular and Electronics Association of India (ICEA) has approached the government to consider capping the import duty on premium mobile devices to Rs 4,000 per piece, instead of the current 20% in proportion to the estimated value of the goods.

According to an Economic Times report, the letter has been addressed to the Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT) within the Ministry of Commerce. DPIIT can take the matter up with officials of the Finance Ministry if they feel this request is justified, and the Finance Ministry has to work out the revenue implications.

The ICEA has tried to urge the government through its letter that current import duty regime is only resulting in smuggling of premium phones into India and the government losing out on precious revenue.

The association also pointed out that premium phones are priced higher than Rs 50,000, and the differential between the ultimate retail price after payment of duty and the price at which these phones can be purchased in countries like Hong Kong and Dubai could widen. There is no tax charged on mobile phones in these markets and this encourages smuggling since bringing in mobile phones through air customs is not that difficult.

Besides depriving the government of revenue, smuggling phones to selling at lower prices affects phone retailers as well as they lose out on sales.

The situation is that the quantum of premium phones sold in the Indian market is not too high. The only scenario where phone makers like Samsung and Apple will resort to assembling their high-end models within the country is when they want to export from here. In other cases, the premium phones are invariably imported and sold through retail outlets, online or offline.

Some of the members of the ICEA include brands like Vivo and Oppo, and phone manufacturers like Foxconn and Flextronics.

Experts feel all this could change when all the phone manufacturers set up their manufacturing units in India for which the favourable climate has been created through the cut in the corporate tax. The government has already announced or is in the process of granting more incentives to the electronics goods manufacturing sector.

There has been no reaction yet from DPIIT on the letter from the ICEA.―The News Minute