Budget 2015 may raise import duty on electronics, mobile phones

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budget2015January 27, 2015: As the Budget 2015 draws closer, industry experts expect that electronic items are likely to become dearer.

The Budget 2015-16 is expected to raise the import duty on mobile phones and laptops by 2%-3% in order to push domestic manufacturing of these items, considering the Make in India initiative, said sources familiar with the matter.

Presently, import duty levied on mobile phones across various categories stands at six per cent. However, the import duty levied on personal computers and laptops is much higher. The import duty on these products stands at 12 per cent.

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The government imposes anti-subsidy duty or countervailing duty on few of the products to offer domestic players a level of fairness.

In case the increased rate of import duty is implemented on these products, the government can draw an additional revenue of more than Rs 40 billion. A major part of this revenue is expected to come from duty imposed on mobile phones during the financial year 2015-2016.

As per a report, India’s import of mobile phones in the year 2014 stands at 225 million units. The industry expects the figure to rise to 259 million, marking a 15 per cent rise in import of mobile phones. On an average, the units of laptop and desktop computers or PCs shipped to India each year stands at nearly 10 million.

Presuming the average cost of a mobile phone prior customs duty at Rs 4000, the government could earn an extra revenue of Rs 31.2 billion only from mobile phones. Adding to this figure is Rs 10 billion that could b earned from duty on laptops and computers. The total revenue the government could potentially earn by increasing import duty stands at over 40 billion.

Some industry experts believe that the government’s intention to hike import duty on these items could be way higher than just increasing revenue. Experts feel that government’s move to hike duty on finished imported products will promote and boost domestic manufacturing in the country.

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