Import Duties On Telecom Products Justified: India

by CXOtoday News Desk    Dec 12, 2016

Telecom

In what is being seen as a conflict with the WTO (World Trade Organization), an Indian representative has justified the import duties which have been imposed on four telecom products, which are expected to come into the country in the future. According to the Indian representative, the 4 main products in contention were not in existence, when the ITA-1 contract from WTO was signed. The equipment includes voice-over-internet protocol phones, optical transport equipment, which are now being contested by the EU, US and Japan who say, as being covered by the ITA-1 agreement, and ought o be duty free in India.  

According to the New Delhi representative’s argument, though these items listed could well be a part of the ITA-1 agreement, and that WTO’s viewpoint may be right on the duty-free status, but when India had signed the contract, these equipment were not is existence. Making this point clear, the representative said, as per media report, “India is not intending to take any fresh commitment on goods for which it did not sign the ITA 1, and which have subsequently evolved.” It also added, that when the ITA-1 was signed and negotiations took place before that, the code for telecom equipment (HS Code 8517), reffered to apparatus targeted towards ‘carrier-current line systems and digital line systems’. 

What could also shed some light on the status of the dispute is, evolution of technology. Ever since India signed the agreement, technology has evolved, and the number of devices under the ITA-1 have been expanded, to include those new technology equipment. That is the reason why India’s representative clarified to the media saying, “Since our ITA-1 obligations are limited to those items that confirm to the 1996 definition of products for “carrier current line systems and digital line systems”, new products that have lately been classified under this category cannot be considered as part of ITA 1 agreement.”

The history with import duties on telecom products

It was in July 2014, when India decided to impose a 10% import duty on soft switches, VoIP phones, media gateways, gateway controllers and session border controllers, optical transport equipment and IP radios, carrier ethernet switch, multi-protocol label switching-transport profile products and multiple Input/Output and long-term evolution (LTE) products. Also, ITA-2 which came into existence after 1996, since when technology has evolved a long way, India has not signed on the new agreement.

The reason for this is being attributed to the fact that all signing member states would need to bring down import duties on the listed products, to a nill, which has economic consequences for the government. In fact with ITA-1 itself, India’s experience has not been positive, and it did loose out on the domestic manufacturing industry of telecom, electronics and IT hardware, which got run over by cheaper alternatives from China, South Korea, and the United States.

It thus drives to the obvious and easy conclusion that, that it is protectionism, and giving a superior external support for the domestic industry in India, for which the Indian representative made the argument. Though reducing imported equipment duties would push the domestic industry, by providing lesser costs, it would still be detrimental to India’s domestic manufacturing industry for telecom products, which needs support to grow to potential.