India’s decision to increase customs duty to 20 percent from 10 percent on some telecom equipment, and impose duty on printed circuit boards will have a major impact on telecom operators, The Economic Times reported.
India Government last week said telecom products including base stations, optical transport equipment and IP radios will attract customs duty of 20 percent instead of 10 percent from Friday.
Several telecom products on which no duty was levied – such as populated, loaded or printed circuit board – will now attract 10 percent duty.
Telecom operators such as BSNL, Bharti Airtel, Vodafone Idea and Reliance Jio will be forced to spend an additional Rs 5,000-6,000 crore on telecom network Capex due to this move. The immediate impact will be slowing down in network expansion focusing on 4G.
The main hit will be on overseas telecom equipment makers such as Huawei, Ericsson, Nokia, ZTE and Samsung.
The Indian Express reported that the India government could take additional measures to curb imports.
Telecom industry experts suggest the current move will encourage local manufacturing, thus giving a boost to the Make in India initiative of the BJP-run government.
The items that will face customs duty hike this time include smartwatches, optical transport equipment and voice over internet protocol equipment. Certain inputs used in the communication industry such as Printer Circuit Board Assembly (PCBA) will also see a hike in the import duty.
Import duty on populated, loaded or stuffed printed circuit boards of all goods other than mobile phones, base station and optical transport equipment has been raised to 10 percent, reported PTI.
Duty has also been raised to 20 percent from 10 percent for base stations and for machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, voice frequency telegraphy, digital loop carrier systems and multiplexers.
The finance ministry also barred the use of imported electronic intermediate goods, mostly those used to make telecom equipment, in the local manufacture of the latter, Hindustan Times reported.
India’s finance minister Arun Jaitley in September said his ministry would levy higher import duty on some goods as part of measures to shrink the current account deficit.
The CAD, the difference between inflow and outflow of foreign exchange, widened to 2.4 percent of gross domestic product (GDP) in the April-June quarter. The Indian currency has lost around 7 percent in the month to October 12.
