Amid Trade War With US, India Reluctant To Lower Import Duties On Mobile Phones

As trade relations between US and India run into rough weather, India continues to stand its ground on  the customs/duties levied on various products. In its latest engagement with the United States of America, India has proposed that it may consider lowering import duties on high-end mobile phones but not on cheap phones as it could hurt domestic manufacturers.

The move comes just days after the US has said it will withdraw the tariff concessions available to India under the Generalized System of Preferences (GSP).

Both countries have national interests to take care of. While Donald Trump-led US government has been calling for Save the jobs narrative, Indian government has been playing on Make in India narrative. As part of their fresh discussions on trade policies, it is being reported that one of the big demands made by the US is that India should revoke the 20% import duties on mobile phones that it imposed over the last couple of years.

To this, Indian officials said that duty cuts or elimination on high-end phones, say over INR 50,000, could be considered. However, the US is not ready to agree to the suggestion and is insisting on removal of import duties from all categories of mobile phones.

This comes after the Union Minister for Commerce & Industry and Civil Aviation Suresh Prabhu recently said that India had made an offer to the US on the demands made by it after consulting several departments including IT and agriculture.

Also, recently, premium smartphone maker Apple started manufacturing iPhone 7 model in India, in addition to iPhone SE and iPhone 6s after Suresh Prabhu met the leadership board of Apple Inc in Davos, Switzerland, in January. The meeting included discussions on a deal to set up an Apple manufacturing unit in India.

According to the minister, the Indian government has been in talks with the company  for setting up the manufacturing plant. It was reported that Apple has requested an exemption from duty on manufacturing and repair units along with components, capital equipment and consumables for smartphone manufacturing.

A report by Canalys said that India has now overtaken the United States to become the world’s second-largest smartphone market after China. Smartphone users in India are projected to reach 829 Mn by 2022 as the country is currently the world’s fastest-growing smartphone market with 23% CAGR.

The ongoing trade talks between India and the US got stalled last month and the renewed talks still look farsighted. In the age where India is becoming a leader of smartphones, US’ demands for to remove import duties may act as a deterrent for private India manufacturers.

[The development was reported by Hindu Business Line.]