Soon, you might have to pay 5-10 percent extra to purchase an imported mobile phone. The government is mulling applying customs duty on imported mobile phones once the Goods and Services Tax (GST) regime becomes operational.
According to a report in the Economic Times, the move is aimed at curbing the influx of Chinese smartphone imports and providing an incentive to phonemakers to manufacture phones in India. The Department of Electronics and Information Technology (DeITY) has already taken a legal opinion to ensure that it will not be breaking the Information Technology Act (ITA) International pact if it implements the proposal.
Smartphone makers such as Xiaomi, Oppo and Lenovo have already started producing phones in India to meet local demand. Even the tech juggernaut, Apple, has taken the first steps towards manufacturing smartphones in Bengaluru. The company has asked for tax discounts but the government reportedly is not in favour of bestowing special concessions to just one phonemaker.
According to ET, the government believes that zero customs duty on phones has not helped the 'Make in India' campaign. It has set up a committee comprising officials from different departments to examine the matter in detail.
Government authorities also want to slap custom duties on some imported electronic parts. This should help give the 'Make in India' program a boost. According to a report by Counterpoint Technology Market Research, on an average, locally produced components contribute to only 6 percent of a phone's total component value.
While the government is tightening the screws on imported electronic goods and components, some analysts believe that since the local industry is still at a nascent stage of development, the move could have a negative impact as well.