The Budget imposing higher duties on certain mobile phone parts is likely to be opposed at the World Trade Organization (WTO) as certain countries are likely to see it as violation of the IT Agreement.

“India’s import duties on mobile phones and some communication equipment have already been challenged at the WTO by members such as the EU, Japan and Taiwan. The additional import duties on mobile phone parts can be challenged by the same members. The matter needs to be analysed within the government and arguments prepared to justify the duties,” an official told BusinessLine.

In the Budget presented on February 1, import duties on printed circuit board assemblies (PCBA), a key component in feature phones and smartphones, were raised to 20 per cent from 10 per cent. The Customs duty on vibrators/ringers and display panels of mobile phones, which was nil, has been set at 10 per cent.

The IT Agreement (ITA), signed by a number of WTO members including India in 1996, requires each participant to eliminate and bind Customs duties at zero for all products specified in the Agreement, including mobile phones and parts.

The EU, which is in consultations with India on the duties earlier imposed by it on mobile phones and parts and other communication equipment, alleged that the rates were in excess of what was committed to at the WTO by India. These items included telephone sets, including telephones for cellular networks or for other wireless networks, transmission apparatus for radio-broadcasting or television, television cameras, digital cameras and video camera recorders and microphones, loudspeakers, headphones and earphones, among others.

Japan had complained at the WTO about India’s duties on mobile phones, base stations and routers, as also on circuit boards and other components that go into them.

Taiwan, in its complaint, had claimed that India had imposed these duties on 11 categories of ICT products in excess of its bound duty rates for the goods.

India defends move

In its defence, India had said that the import duties on the items did not breach the ITA as the items, in the present form, were not covered under the pact.

“The fresh duties on mobile phone parts and related products could push India further on the defensive at the WTO. While at the moment the WTO Appellate Body is dysfunctional, New Delhi still needs to clarify its stand strongly so as not to appear irresponsible,” the official said.