Govt mulls custom duty retention on telecom products

The government is planning to retain the 10% customs duty on specified telecom products, including 2G, 3G and 4G network gear, proposed in the budget in order to create a level playing field for domestic manufacturers.

“Imposition of customs duty on specified telecom products will create a level playing field for domestic manufacturers who suffer severe disability due to poor infrastructure and inverted duty," media reports said quoting a Department of Telecom's (DoT) internal note to the revenue secretary.

The products include network gear, switches and broadband systems, among others.

DoT said that India is under "no obligation to allow duty free imports of items not covered in ITA-1" in its letter to the revenue secretary.

But the industry is disappointed with DoT's move as it would hamper investor’s confidence.

"Nearly 80% of the value of imported network gear comprises software which is IP-protected and cannot be manufactured locally, which is why imposition of 10% customs duty will have no impact on reducing imports or increasing domestic manufacturing," media reports said quoting an executive from a telecom operator.

Rajan Mathews, director general, COAI, GSM lobby group, said that such tariff barriers would erode foreign investor confidence and invite retaliatory measures by countries exporting equipment to India.