Import Duty Hike on Telecommunication Products Will Add to Industry’s Financial Woes: COAI

The industry body, COAI, today urged that the hike in import duty on telecommunications products would rest in an overall increase in industry’s import costs by about 10%, which will add to the already existing financial woes. However, COAI affirmed that telcos are fully aligned to the interest of the nation. The Cellular Operators’ Association of India (COAI) estimates that the industry’s imports bill for network equipment stood at about USD 2-3 billion over last two quarters and that costs are expected to rise by about 10%.

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Government Hikes Import Duty on Communication Items by 10%

The government on Thursday hiked the import duty on certain communication items, including base stations, to up to 20% as part of efforts to check a widening current account deficit by curbing imports. This marks the second round of import duty hike announced by the government in about a fortnight. The revised duties would be effective from Friday.

“We hope this is a temporary situation, and once the crisis is over, the operators will get back to their regular rollout schedule. On critical infrastructure, obviously the operators will incur a higher cost, and it will hurt because of the financial health problem,” COAI Director General Rajan Mathews told PTI.

Telcos Would Have to Incur 10% Increase in Import Cost

Admitting that latest move would lead to a 10% increase in import cost for operators, Mathews said industry might “adjust” some of the planned rollout. “It will increase the cost and financial challenges for the industry. Annually, operators import USD 8 billion worth of network equipment, and in the last two quarters, they would have done a third of that…USD 2-3 billion worth of imports,” Mathews said.