Some illegal telecom equipment imports continue, as product codes are manipulated

The department of telecommunications (DoT) has sought the support of the Customs department to strengthen the mechanism to check import of telecom equipment.

This is because despite the rationalisation of the Customs Tariffs Act to plug loopholes, some companies are able to import telecom equipment in the non-trusted category by manipulating product codes.

The risks of this are two-fold. First, products from China with malware can enter the country. And second, the government loses revenue as the codes are changed to those of products attracting zero duty. Further, firms which have been selected under the production-linked incentive schemes also lose out as the finished products manufactured by them face competition from cheaper imports.

The Customs department has asked DoT to share a list of codes that are being manipulated so that it can step up its vigil. Routers, switches and gigabit passive optical network (GPON) OLT equipment figure among these products.

Simultaneously, DoT may also audit companies who claim to be manufacturing in India. According to official sources, the inspections could cover the companies’ manufacturing set-up in the country, components they are importing, location of factories, spends on research and development, and employee strength, among other factors.

Telecom products attract up to 20% customs duty. However, for components being used by firms manufacturing in the country, the duty rate is zero.

The government has also decided not to grant telecom companies one-time approval to import certain equipment from countries like China, after finding that it was being misused. For instance, a telecom firm had sought permission to import 500 units of a GPON OLT product, but used the certificate of approval to import over 50,000 units, a government official said.

Optical line terminal (OLT), also called fibre OLT, acts as an endpoint hardware device used for transmission of data required to provide fibre home broadband services. GPON is a network capable of high gigabit speeds.

According to a report by a DoT taskforce, most of the country’s requirements for telecom products are being met using imports. India’s spending on telecom products was estimated to be $11 billion in 2022 and is expected to increase to $16 billion by 2025, according to Rakesh Bhatnagar, director general of VoICE consortium, who heads the taskforce. Financial Express