Snubbing the US’ demand to eliminate duties on seven information and communication technology (ICT) products, the Ministry of Commerce & Industry is learnt to have told US trade representatives that factors such as “serious economic constraints” such as rising current account deficit and rupee depreciation “make it difficult” for India to consider the revenue loss arising out of duty elimination. India has further informed the US that duty reduction on products such as certain telecom network equipment, smartwatches, high-end mobile phones costing over Rs 10,000 and some mobile phone parts, will not benefit the US while imposing a “disproportionate and unbearable stress on a “low income country like India at a time of significant economic stress”.
Further, government sources in know of the matter told The Indian Express that India has also invoked the fact about US imposition of import tariff on steel and aluminum to protect its domestic industries as an import of 30-35 per cent of their requirements was considered a national economic and security risk. “For similar reasons, on a much more pronounced scale, the threat perception in case of India is much higher in view of huge import of ICT products, and minimal domestic production,” US was told, one of the government official said.
During 2017-18, India’s imports for the seven items on which the US has sought tariff reduction amounted to $20.44 billion, of which imports from the US were $415.26 million. The highest imports were from China at $15.03 billion, followed by Vietnam and South Korea at $905.51 million and $847.73 million, respectively. In April 2017, the Centre notified a phased manufacturing plan to boost domestic production of mobile phones by introducing import duties on products in a phased manner. As per the plan, duty was introduced on products such as charger/adapter, battery pack, wired headset during 2016-17. In 2017-18, duties were introduced on parts such as microphone and receiver, key pad, USB cable, etc. The printed circuit board assembly, camera module and connectors are to be brought under the duty regime in 2018-19; and display assembly, touch panel, vibrator motor etc are planned to be brought under duties in 2019-20.
With an aim to control the rising current account deficit and falling rupee, the government last month had raised basic customs duty on several mainline telecom network products and introduced fresh duties on printed circuit board assemblies. Base stations, optical transport gear, IP radios, MIMO/4G LTE products, VoIP phones, media gateways, gateway controllers, carrier ethernet switches, packet transport nodes and a mix of packet optical transport product or switches now attract 20 per cent duty from 15 per cent earlier. Import of printed circuit board assemblies used for these now attracts 10 per cent duty. This was a part of the move by the Indian government to curb non-essential imports.
Subsequently, according to media reports, six countries – the US, China, European Union, Japan, Canada and Norway – planned to raise concerns about India’s customs duties on ICT products at the World Trade Organization (WTO) earlier this month.