India will shock China, government will impose tax on foreign telecom components

The government is going to make big changes in the telecom sector. According to the information, the government is planning to increase the custom duty by 10 percent in the month of January to increase the manufacturing of telecom components. There is a plan to increase it to 15 percent by October 2024.

The central government of the country has made a new plan to strengthen the telecom industry and create a global manufacturing hub. According to the information, it is planning to impose phasewise custom duty on telecom components to reduce imports from India and create domestic supply chain. The Telecom Department is working on a proposal to impose 10 per cent custom duty on packaging items, antennas, WiFi switches, plastic/metal housing items, wires/cables from January and increase it to 15 per cent by October next year. This step will shock China and those countries which export a lot of telecom components to India.

What is the government's plan?

According to officials with knowledge of the matter, the telecom components also include USB ports/connectors, power adapters and other electrical/mechanical items. Officials said that to promote local production and increase value addition, import duty on these parts and the timeline for its implementation are being considered under the government's Phased Manufacturing Program (PMP). The Phased Manufacturing Program aims to deepen India's telecom gear manufacturing by encouraging local production initially of low value components and later of high value components. There is a plan to achieve the target by increasing the basic custom duty on the import of such accessories/components.

Licensing system will be implemented!

Earlier in the media report, there was news that the Telecom Department is considering bringing all telecom products used in fiber-based home broadband networks under the import licensing system to promote local manufacturing and eliminate or reduce imports. . Recently the government had implemented this system on import of IT hardware. According to officials, if the proposal is approved, the Directorate General of Foreign Trade (DGFT) will implement the import licensing system, which will require telecom companies to obtain relevant permits and prior approval from the government for importing such network gear.

Will costing increase?

The telecom industry is opposing the new scheme of custom duty on imported components, citing lack of an immediate local ecosystem in the country, which could lead to supply chain challenges. According to a senior industry official, in the absence of a strong ecosystem for telecom components/parts, imposition of phasewise custom duty on these items under PMP will increase the costing of finished products. Network deployment cost will increase for carriers like Reliance Jio, Bharti Airtel and Vodafone.