- Handset makers have asked the government to limit import duty on high-end phones above Rs 20,000 to Rs 4,000
- The changes to basic customs duty on high-end devices could recover Rs 1,100 crore for the exchequer and curb grey market phones by about Rs 5,000 crore
- Apple will be the key beneficiary if the government accepts the request of handset makers
India’s handset makers have asked the government to limit import duty on high-end phones above Rs 20,000 to Rs 4,000 — as opposed to 20 per cent of the import price — to lower the grey marketing of pricey devices and reduce loss to the exchequer.
“There is a significant duty and tax loss on high-end phones. It is estimated that the grey market in high-end phones is over Rs 8,000 crore per year. This translates into a loss of Rs 2,560 crore, of which basic customs duty (revenue) is Rs 1,600 crore,” the Indian Cellular and Electronics Association (ICEA) said in a note to the finance ministry last month.
The changes to basic customs duty on high-end devices in the upcoming Union Budget could recover Rs 1,100 crore for the exchequer and curb grey market phones by about Rs 5,000 crore, the association claimed.
The remaining part of the grey market can be curbed by limiting the number of high-end mobile phones that individual consumers can bring from overseas under baggage allowance, it further suggested, even though it may lead to some consumer inconvenience.
Who will be the main beneficiary?
Apple will be the key beneficiary if the government accepts their request as the company imports most iPhones sold in India and all of its phone models are priced above the Rs 20,000, except for some older second-hand phones.
While a large majority of handset companies make mobile phones in India, including high-end models, analysts at International Data Corporation (IDC) India estimate Apple roughly imports 95 per cent of its portfolio it sells here. The duty on imports makes iPhones sold in India at least 20 per cent more expensive than other markets like Singapore, Hong Kong or the US.
