NEW DELHI: The government on Thursday raised customs duty on eight components and equipment used by the telecom sector as it sought to reduce the dependence on imported goods in a sector with burgeoning demand, which could outstrip the value of oil imports in the coming years. 

This is the second round of duty increase in as many weeks to cut down on what is viewed as "non-essential" imports and save precious dollars at a time when the trade and the current account deficit are widening and piling pressure on the rupee, which has plunged over 15% against the US dollar, making it the worst performing Asian currency so far in 2018. 

The increase in import tariff will impact prices of key equipment such as base stations, optical transport equipment and Voice over Internet Protocol (VoIP) gear. The government has already raised the import duty on mobile phones, which have been spared in this round, tax consultants said. 

"The increased import duty rates on some of these products would entail an additional burden on the telecom industry, where these goods are imported," said Abhishek Jain, tax partner at consulting firm EY.

India's telecom equipment imports were estimated at close to $22 billion during the last financial year, according to data compiled by the Telecom Regulatory Authority of India (Trai). During this period, oil imports were pegged at $88 billion, and are expected to rise significantly this year due to a spike in global prices, which continue to hover above the $80-per-barrel mark.

The only positive is the increased assembly of mobile phones in the country, with several global players such as Samsung and Xiaomi setting up units here, while other such as Apple are yet to firm up plans, despite being in talks for several years.

In the last round, the government had increased import duty on air conditioners, washing machines, refrigerators, textiles and diamonds in an attempt to trim current account deficit, which is the difference between exports and imports and other inflows such as investments and remittances.

The measures were, however, seen to be meagre as the value of these imports were estimated at a little over $12 billion, with trade experts fearing that the source of shipments would move to countries such as Vietnam and Korea with which India has free trade agreements. 

Source : Timesofindia

e-max.it: your social media marketing partner