Withdraw duty on mobile handsets, urges ASSOCHAM

NEW DELHI: The Associated Chambers of Commerce and Industry (ASSOCHAM) urged
the government on Monday to scrap a countervailing duty on imported mobile
handsets, saying it made mobile phones expensive for consumers.

The leading industry body said in a statement there was no rationale for a
countervailing duty as mobile handsets were not manufactured in the country. A
countervailing duty is usually imposed by the government to help local
manufacturers compete with cheaper imports.

"The CVD of 16 per cent inflates price immensely, which not only acts as
a barrier to entry for new cellular subscribers but also gives an impetus to a
thriving grey market in mobile handsets," ASSOCHAM said.

The grey market or the market for smuggled goods accounts for nearly 80 per
cent of mobile handsets sold in the country. "They (the smuggled handsets)
are available at 60-70 per cent of the cost of genuine imports, the differential
largely being accounted for the composite duty and local tariff," ASSOCHAM
said.

Besides the countervailing duty, mobile handset imports into India attract
another five per cent customs duty which was lowered from 25 per cent in the
2001/02 (April-March) budget.

India's mobile phone industry has been growing by nearly 80 per cent year-on
year every month, adding around 200,000 new subscribers every month. The mobile
phone industry had 5.22 million subscribers at the end of November.

ASSOCHAM also urged the government to treat telecom software on a par with
regular information technology software and allow it to be imported duty-free.

(C) Reuters Limited.