Budget 2020-21: Industry seeks low import duty on mobile phones to curb grey market

At a time when India is exporting millions of phones to other countries, it doesn’t make sense in having a high import tariff wall, said an industry expert.

Business Desk, ETV Bharat: In its wish list for Budget 202-21, the India Cellular and Electronics Association (ICEA) has urged the government to reduce import duty on mobile phones to curb the grey market.

In its representation to the Department of Revenue recently, the ICEA has suggested that a reduction of 20 per cent in import duty or Rs 4,000 per mobile, whichever is less, can be considered in view of the robust domestic manufacturing and industry’s readiness to face the global competition on the back of the PLI scheme.

At a time when India is exporting millions of phones to other countries, it doesn’t make sense in having a high import tariff wall, said an industry expert.

As per an estimate, India exported USD 3.8 billion worth of mobile phones in 2018-19 and the country is ranked among the fastest growing mobile phone exporters in the world.

Besides, the recent Production Linked Incentive (PLI) announced as part of the Atmanirbhar Bharat, is producing good results.

“Production-linked incentive scheme (PLI) was launched in April 2020 and now several big companies have joined this scheme which are committed to manufacture phones worth Rs 10.50 lakh crore in coming 5 years and will create 9 lakh direct and indirect jobs,” tweeted the IT and Telecom Minister Ravi Shankar Prasad recently.

Under the PLI scheme, companies like Samsung and iPhone maker Apple's contract manufacturers Foxconn Hon Hai, Wistron and Pegatron expressed interest to set up new plants or expand their existing capacities in India to serve the domestic as well as other markets.

Grey market is a concern

Though high-end phones constitute less than 5 per cent of the total mobile phone sales in the country, high import tariffs are resulting in the mushrooming of the grey market.

“A high-end iPhone model costs around Rs 40,000 less in Dubai when compared to the price in India. From the consumer point of view, this is a huge difference,” observed the expert mentioned above.

Echoing similar views, Prabhu Ram, Head-Industry Intelligence Group, CyberMedia Research, said: “As the wheels of change pick-up and supply chains realign in the post-virus era, it is imperative to maintain the competitiveness of the mobile handset industry by curbing the grey market.”

Notably, the basic customs duty on fully-made phones has gone up from 15 to 20 per cent in the Budget 2018-19 and an additional 10 per cent service welfare cess was re-imposed in the Budget 2019-20 to discourage imports and encourage ‘Make In India’ products.