New Delhi: To crop burgeoning trade deficit, Government of India has reportedly raised import duty in telecom products used by the telecom sector. This revision on import duty came into effect, as a result, to reduce dependence on foreign goods and gain some extra precious dollars.
Government is trying to reduce the uprising burden of increasing account deficit which has plunged over 15% against the US dollar, making the currency as the worst performing currency of Asia in 2018.
The increase in import tariff will impact prices of key equipment and Voice over Internet Protocol (VoIP) gear. The government has already raised the import duty on mobile phones which has been spared this time.
“The increased import duty rates on some of these products would entail an additional burden on the telecom industry, where these goods are imported.” –Abhishek Jain, tax partner at consulting firm
India’s telecom products import were around $22 billion during the last financial year, according to the data released by Telecom Regulatory Authority of India (TRAI).
India is currently the world’s second-largest telecommunications market with a consumer base of around 1.17 billion and has gained strong growth in the past half a decade. The Indian mobile economy is growing exponentially and will contribute substantially to India’s Gross Domestic Product (GDP), according to report prepared by GSM Association (GSMA) in association with the Boston Consulting Group (BCG). App downloads in the country grew approximately 215 percent between 2015 and 2017.
The only positive improvement is that several mobile giants had set up their assembly plants in India such as Xiaomi, Samsung; Apple has yet to firm up their plans for setting up their assembly plants.
In the last round of raise, the government had increased import duties on air conditioners, washing machines, refrigerators, textiles, and diamonds.
However economic experts have been seeing the measure as inadequate to counter the current trade deficit; as the value of these imports estimated to be around a little over $12 billion.