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Tuesday, February 27, 2007
R Jai Krishna
NEW DELHI: The tremendous growth in telecom services in India has now drawn the attention of global players such as Elcoteq, Nokia, Ericsson, Alcatel, LG, Motorola, which have set up manufacturing facilities for wireless equipment and terminals.
However, industry experts feel that this would not help the development of indigenous technology catering for specific Indian conditions that needs sturdy products at lower prices.
Development of market and the need for integrating the Telecom hardware sector with global stream so as to become internationally competitive, and the elimination of duties on this segment as per commitment to WTO needs special sectoral treatment rather than being governed by general policy framework.
IT agreement includes number of goods related to telecommunication and consequently this sector faced the unfettered competition. Customs duty on all items covered by the IT Agreement was reduced to nil in the Budget 2005 with simultaneous reduction of customs duty to nil on inputs for such products.
However, additional countervailing duty of 4 per cent was imposed on items bound under the IT agreement and their inputs to compensate the State level taxes on similar indigenous goods.
Eight specified equipment required for the manufacture of mobile handsets are allowed for import at nil customs duty (as per Sl. no. 58 of customs notification 25/2002).
To boost manufacture of other telecom items indigenously, customs duty on capital goods used for this purpose should be reduced to 5 per cent.
Customs notification (24/2005 and 25/2005) allows import of goods covered by IT Agreement as well as goods required for the manufacture of such goods at nil customs duty. Sub-assemblies should be treated at par with finished products and the dispensation of customs duty should be extended to inputs required for the manufacture of components of items covered by IT Agreement.
A customs notification (Sl no. 239, 21/2002) allows import of specified goods mentioned in list 22 at nil customs duty. Sl no. 3 of list 22 reads as: “Radio Communication Equipment including VHF, UHF and microwave communication equipment, such as Base Transceiver station (BTS). Though the customs authorities allow import of BTS at NIL customs duty but charge duty on microwave equipment, the industry feels that the Union Budget 2007 would clarify on this issue.
According to major players in the telecom industry, they expect the Union Budget to have a reduction in customs duty to 5 per cent on capital goods required for manufacture of telecom equipment covered by the IT agreement. The industry feels that the ‘nil’ customs duty concession to inputs required for manufacture of components and sub-assemblies of good covered by the IT agreement, also be extended.
The telecom industry also feels that a clarification is needed on the issue of microwave equipment being allowed for import at ‘nil’ customs duty under Sl. No. 239 of customs notification 21/ 2002.
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