Govt increases import duty on telecom equipment to 20%

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The Government has raised import duty on various telecom equipment to address the country’s increasing current account deficit and weakening rupee

As part of its measures to reduce the current account deficit (CAD) and preventing further weakening of the rupee, the Government of India has increased the basic custom duty on 17 items, including various telecom equipment, as per a notification released by the Ministry of Finance on Thursday.

The Government has raised import duty on various telecom equipment and levied basic custom duty on printed circuit boards as the country is looking to check imports of non-essential items, in order to address the country’s CAD and also to boost the ‘Make in India’ programme.

Customs duty up from 10% to 20%

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The basic custom duty has been raised from the present 10% to 20% on smart watches and telecom equipment. The telecom products include base stations, optical transport equipment, Optical Transport Network (OTN) products, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS), and IP radios.

In another notification, the Ministry also curbed the use of imported electronic intermediate goods that are majorly used in the manufacturing of telecom equipment, in the domestic manufacturing of the latter. In addition, several other telecom products that were under the zero duty would now be imposed with a customs duty of 10%.

The changes in the basic customs duty would be applicable from October 12, 2018, according to the notification.

CAD widened

In the financial year 2017-18, India has imported telecom equipment worth around $21 billion, witnessing an increase as compared to $16.2 billion imported in the fiscal of 2016-17.

The CAD, which is the difference of inflow over the outflow of foreign exchange, has increased to 1.9% of gross domestic product (GDP) in the fiscal of 2017-18 from just 0.6% in the year ago period. In the quarter of April-June 2018, the CAD has widened to 2.4% of gross domestic product (GDP).

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