Economy

Move to levy post-GST import duties on mobile phones sparks WTO protest

Amiti Sen New Delhi | Updated on January 11, 2018 Published on May 08, 2017

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US, EU, Japan, Korea protest ‘breach’ of IT agreement; India cites tech evolution

India’s plans to impose import duties on mobile phones under the Goods and Services Tax (GST) regime have created a flutter among manufacturing countries, including Japan, Korea, the US and the EU, at the World Trade Organization (WTO) and led to protests.

All four have alleged that it would amount to a violation of the global information technology agreement (ITA) and have asked New Delhi to explain the situation.

“At a recent meeting of the WTO Committee on Market Access, strong objections were raised by the EU, the US, Japan and Korea on the proposed import duties on mobile phones by India. They also questioned duties already imposed on some electronic equipment like digital cameras,” an official privy to the details of the meeting told BusinessLine.

Taiwan, Canada, Singapore, Norway, Switzerland and Thailand also expressed their concerns on the issue.

The objections do not mean that India will not be able to impose the customs duty from July 1 (the proposed date for implementation of the GST) if it wanted. But it indicates that members could launch a dispute against such a move if New Delhi is not able to give satisfactory replies to the queries raised.

The EU said India was bound by a commitment of zero per cent duty under the ITA (part of General Agreement on Tariffs & Trade), and its argument that mobile phones can be considered as “new products” not covered by the pact was invalid.

The US asked India to explain how a duty increase on mobile phones would be consistent with its binding WTO commitments.

Japan, in its intervention, pointed out that this was not an issue of evolution of products, as India insisted, but of tariff classification.

India is looking at imposing customs duty on imported mobile phones after switching to the GST regime in order to protect local manufacturers.

The Commerce Ministry has maintained for long that import duties could be levied on new items that evolved after the ITA was signed by it in 1997. The Ministry of Electronics and Information Technology has additionally got a legal opinion from the Attorney-General, which confirms that the move will not violate the ITA.

Tariff commitments

At the WTO meeting, India reiterated that the main issue at stake was not the classification, but the tariff binding commitments.

It stressed that IT and telecom technologies have evolved with new applications and equipment that did not exist, and had not even been conceived, at the time of signing the ITA.

Therefore, the new products cannot be considered as falling under the scope of the agreement as they did not exist at the time of granting concessions.

It added that it did not intend to make any fresh commitments and would not be a part of ITA2, which was signed by some members recently to take care of new developments in technology.

Published on May 08, 2017
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