In a bid to fortify its domestic supply chain and transform it into a prominent global telecommunications equipment manufacturing hub, India is contemplating the gradual imposition of customs duties on various telecom components.
The proposal, currently under scrutiny by the Department of Telecommunications (DoT), outlines a plan to initiate a 10 per cent import duty in January, with the intention of increasing it to 15 per cent by October of the following year, as per reports from The Economic Times, citing officials.
The components targeted by these potential import duties encompass a range of items, including packaging materials, antennae, WiFi switches, plastic and metal housing products, wires, cables, USB ports, connectors, power adaptors, and various other electrical and mechanical items that pertain to the telecom industry.
These proposed import duties are part of the government's Phased Manufacturing Programme (PMP), which has been formulated to incentivize local production and elevate value addition within the industry.
The PMP is strategically designed to enhance India's capabilities in manufacturing telecom equipment, starting with the promotion of local production of lower-value accessories and gradually progressing to higher-value components. This strategy entails the elevation of basic customs duties on imported accessories and components.
Should the proposal gain approval, the Directorate General of Foreign Trade (DGFT) would implement an import licensing regime. Under this regime, telecommunications companies would be required to secure permits and prior government approval for the importation of network gear utilized in fibre-based home broadband networks.
Nonetheless, there have been reservations expressed by the telecom industry regarding the proposed customs duties on imported components. Leaders within the industry who have spoken with ET have contended that India currently lacks an immediate local ecosystem for these components, which could potentially result in disruptions to the supply chain and increased costs associated with network deployment.
The government's drive for self-reliance within the telecom sector is primarily motivated by national security concerns and a desire to stimulate participation in the production-linked incentive (PLI) scheme for network gear.
The potential imposition of customs duties is perceived as a means to discourage imports and ensure that telecom gear manufacturers actively utilize locally available components, thereby fostering increased domestic value addition.
Additionally, experts believe that such a move could diminish India's dependence on foreign markets, particularly China, for imported components and raw materials, positioning the country as a self-reliant alternative within global telecom gear supply chains.
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