In an attempt to give boost to the domestic manufacturing industry, the Ministry of Finance (MoF) has decided to impose a customs duty of 10 per cent on the imported telecom equipment. Though the finance ministry fell short of announcing the list of telecom equipment, but it is likely to include switches for 3G and 4G technology. Industry experts are of the view that the move would increase network rollout cost, which in turn could push data tariffs.
However, telecom equipment, including mobile handsets that fall under the purview of the Information Technology Agreement (ITA) would not be subject to the customs duty. ITA is a global agreement among several countries including India under the World Trade Organisation.
Meanwhile, MoF has also decided to levy an education cess of 3 per cent on electronic products including mobile handsets. The education cess would be imposed on the countervailing duty applicable on mobile phones, which stands at 6 per cent currently. This would lead to rise of only 0.18 per cent in the cost of mobile handsets. According to most industry analysts, manufacturers will be able to borne this additional cost.
