Budget 2021

Increase in cell phone import duty could spell trouble at WTO

Amiti Sen | | Updated on: Feb 01, 2018
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EU, South Korea, Canada have already accused of flouting IT Agreement rules

An increase in import duty on cellular phones to 20 per cent from 15 per cent announced in Budget 2018-19 could lead to more trouble for the country at the World Trade Organisation (WTO).

A number of countries including Japan, the EU, Canada, the US, Chinese Taipei, Norway, Vietnam, Thailand ,Singapore, Korea and Australia had accused India of flouting the WTO’s Information Technology Agreement (ITA) rules when it imposed import duties on cell phones and base stations last year.

“With India increasing import duties on cell phones instead of removing them, the countries are likely to be angered further and could drag New Delhi to dispute at the WTO,” a Delhi-based trade expert told BusinessLine .

According to the ITA, signatories are not to impose import duties on a number of IT products which include cellular phones. However, India argued that technological advancements should also to be taken into consideration and the smart phones that were being imported were very different from the cellular phones existing at the time the ITA was signed.

“The members who challenged India’s import duties were not satisfied with India’s explanation as they said that the product category remained the same. There is a possibility that a dispute could be started against the country at the WTO,” the expert said.

Since it takes more than two years for a case to be filed and a judgment to be delivered, India has enough time to extend at least a short-term protection to its domestic mobile phone manufacturers.

Published on February 01, 2018

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