Centre raises duty on electronic items

Centre raises duty on electronic items

Context

The Centre has increased customs duty on several electronic items including televisions, mobile phones and microwaves, making the import of these goods more expensive and thus lending a fillip (something which acts as a stimulus or boost to an activity) to its ‘Make in India’ programme.

Steps taken

  • The custom duty on push button phones, including mobiles, and on smart electricity meters has been increased to 15%, from 10% now, as per a notification issued by the Ministry of Finance
  • The duty on products like monitors, projectors, water heaters, microwaves, TVs and lamps and light fittings has been doubled to 20%.

Major Policy Shift

  • The duty increases had been made under “emergency powers” included in the customs laws, and could prompt manufacturers in other industry segments to push for similar protection from imports.

Objective

  • To foster the national initiative of Make in India
  • Increasing revenue as well as to encourage more manufacturing and value addition in India
  • This would make import of these goods costlier and industry would be forced to explore domestic manufacture of these goods to reduce cost instead of importing these goods.

Apple to be hit

Meanwhile, Reuters reported that the rise in tax to 15% on handsets will make imports of phones — including most of Apple’s iPhone models — more expensive at a time the company’s revenue growth is slowing in India’s $10 billion smartphone market.

Boost to Domestic Cellphonemanufacturing industry

PankajMohindroo, president of the Indian Cellular Association, said the increase will boost domestic manufacturers who are making about 500 million cellphones a year, more than double the output three years ago

Mobile phones in India

  • Eight out of 10 phones sold in 2017 have been made locally, data from Counterpoint Research showed
  • Samsung assembles in India most of the handsets it sells in the country.
  • Apple currently only assembles its iPhone SE models in India and imports others
  • The company has sought a range of incentives and tax relief from the government for it to expand its manufacturing in India, but government officials have said they are unlikely to make exemptions for Apple.

Concerns

India’s goods imports in the seven months ending October rose 22 % to $256.4 billion from a year earlier, raising concerns among policymakers.

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