Govt Hikes Custom Duties on Telecom Equipment to Promote Make in India

The Government of India has hiked customs duties on telecom equipment and has also imposed taxes on the printed circuit boards which are used in the manufacturing of the same. Products being imported from other countries like base stations, optical transport equipment, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) have been levied with an increased customs duty of 20% in order to tackle the current account deficit situation in India along with propelling growth for the make in India program. Notably, the customs duties which were being levied on this equipment were only 10%; now the figure has doubled.

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Custom Hike – an Effect of Account Deficit

Also, as per the new regulation and rates, the equipment which used to enjoy zero duties would also be levied with 10% of charge. As per the notification of Central Board of Indirect Taxes and Customs on Thursday, these new rates would come into effect starting today, i.e. October 12. Pulling up the data for the present and previous years, it’s apparent that India imported approximately $21 billion worth of telecom equipment in FY18, as compared to the $16.2 billion in FY17.

To tackle with a much more mainstream issue of current account deficit the customs duty on many more products has been hiked. These consumer goods products include air-conditioners, washing machines, refrigerators, footwear, jewellery, tableware, and furniture fittings. Further, aviation turbine fuel has also been levied with more duty as compared to the previous rates.

Situation Predicted to Worsen

These changes come as the result of current account deficit declining to 1.9% of GDP in FY18 down from 0.6% which was the rate in the previous year. However, the situation is only going to worsen as the deficit has been predicted to rise to the figure of 2.8% in the current year.

In the first five months of the FY, the trade deficit has grown to $80.4 billion against the $67.3 billion, which was the figure around the same time last year. Going by the words of a top executive in one of India’s top telecom equipment manufacturing company, this move is going to force the hands of telcos to procure equipment from local vendors thus reducing the dependence on international companies especially with the rupee getting weaker.

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9 Comments on "Govt Hikes Custom Duties on Telecom Equipment to Promote Make in India"

 

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Rahul
October 13, 2018 12:03 pm 12:03 PM

Bad Move.This stupid government will ruin everything. A sincere request to the govt to save our falling Rupee.

Mani Mahesh Dhiman
October 13, 2018 6:44 pm 6:44 PM

This is good move, rupee is falling because of high crude oil price

geek
October 12, 2018 11:02 pm 11:02 PM

Seems Jio has completed procurement of equipment……….

tri_vis
October 14, 2018 5:19 pm 5:19 PM

Bolne ko kuch bhi

Chetan | Bangalore
October 13, 2018 7:56 am 7:56 AM

Jio imports RF equipment from Korea and it is already under free trade. Only band 850 antenna is imported from China which belongs to other brand

Kiran Fernandes | Goa
October 12, 2018 9:33 pm 9:33 PM

The dollar rupee rate is still gonna be shooting up. This is a bad move. It’ll hurt the telecos even more, and also foreign companies that sell telecom equipment in India.

Mani Mahesh Dhiman
October 13, 2018 6:42 pm 6:42 PM

Rupee is falling because of raising crude oil price, our currency still stronger compare to other developing world currencies

dragonmonk
October 14, 2018 7:28 am 7:28 AM

@mani Nope.

Pritesh
October 15, 2018 12:07 am 12:07 AM

Mani is right actually. Just study why Indian rupee strengthened friday by almost 56 paise. Hint : Because cost of oil decreased by 4$ per barrel.
Basically imports decrease the value of currency and exports increase it. So government decision is very good.

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