Popular smartphone companies including Apple mobiles and Lava mobiles have said that India’s $28 billion handset manufacturing industry is facing a growing threat from an EU proposal for a WTO panel to check the country’s high basic tariffs on high-end smartphones.
“If India loses the case, not only will it have a devastating effect on tariffs of high-end phones, but the entire range of mobile handsets manufactured in India,” Pankaj Mohindroo, chairman of the Indian Cellular & Electronics Association (ICEA) said, in a letter to electronics and information technology secretary Ajay Sawhney, revenue secretary Ajay Bhushan Pandey, and commerce secretary Anup Wadhawan. ICEA represents Apple, Foxconn, Flextronics, and other electronics manufacturers.
The government set a target of $110 billion for exports of smartphones from India by 2025 from the current exports around $3 billion. If India lose this event, it would be bound to cut basic customs duty on all handsets, which would attire away manufacturing in India and flood the local market, even in the low-end segment with cheaper imports from China.
The industry association has reinforced its suggestion of the duties on high-end phones individually, particularly those priced Rs 20,000 and above, to a flat rate of Rs 4,000 per device. ICEA said that this would address the issues of the EU and ensure that the government will not lose money.
The basic customs duty causes the Exchequer an annual loss of Rs 2,500 crore due to the smuggling of smartphones priced at Rs 50,000 or higher and destabilizes Indian smartphone retailer’s business. ICEA reported that the industry was shocked that the government raised its obligation to 22% from 20% in the Union budget, which would increase arbitration on high-end smartphones, lead to more smuggling and greater losses on the exchange.
Mohindroo said the US was likely to join the EU in the price battle.
We confirmed the news that the US government is under pressure from several congressmen and senators to take action against India, similar to the case of the EU at the World Trade Organization (WTO). The ICT prices were originally supposed to be a part of a bilateral trade deal with the US, which failed to materialize.
The WTO’s Dispute Settlement Body on March 5 considered a request from the European Union for a dispute panel to rule on India’s import tariffs on certain information and communications technology (ICT) goods.