The Department of Telecommunications (DoT) is examining a proposal to impose an initial 10% import duty from January and raise it further to 15% by October next year on packaging items, antennae, WiFi switches, plastic/metal housing items, wires/cables, USB ports/connectors, power adaptors and other electrical/mechanical items, among telecom components, said officials aware of the matter. The import duties on these parts and timelines for their implementation are being considered under the government’s Phased Manufacturing Programme (PMP) to drive local production and enhance value addition, the officials said.
The PMP aims to lend more depth to India’s telecom gear manufacturing ambitions by initially incentivising local production of low value accessories and eventually high value components. It proposes to achieve this by increasing the basic customs duty on imports of such accessories/components.
ET reported on September 15 that the DoT is mulling bringing the entire gamut of telecom products used in fibre-based home broadband networks under an import licensing regime to boost local manufacturing and cut import dependence, mirroring recent moves on import of IT hardware.
If the proposal is cleared, the Directorate General of Foreign Trade (DGFT) will implement the import licensing regime that will mandate telcos to take relevant permits and seek prior government approval for importing such network gear, said officials.The telecom industry, though, is resisting the latest plan to slap customs duties on imported components, citing the lack of an immediate local ecosystem in the country, which could throw up supply chain challenges.“In the immediate absence of a robust local ecosystem for telecom components/parts, imposition of graded import duties on these items under PMP would push up the cost of finished products and increase network deployment costs for carriers such as Reliance Jio, Bharti Airtel and Vodafone Idea,” a senior industry executive said.Lately, the government has been pushing for self-reliance in the telecom sector, prompted by national security concerns, and to also encourage participation in the production-linked incentive (PLI) scheme for network gear.
“The immediate objective of any proposal to slap import duties on components/parts would be to discourage their imports and ensure telecom gear makers don’t engage in mere screwdriver assembling using imported parts in the name of PLI and Make in India,” a person aware of DoT’s proposal told ET.
He said the government appears keen to push telecom gear makers to generously use locally available components, at least for passive elements initially, and some active electronics, and increase local value addition.
Experts said such an exercise can potentially reduce India’s dependence on China and other global markets for imported components, raw materials, and in turn, make it self-reliant and position it as an alternative destination for global telecom gear supply chains.
Queries to the Cellular Operators Association of India (COAI), Jio, Airtel, Vi, Ericsson and Nokia remained unanswered at press time.
Separately, the telecom department is examining a proposal to mandate its technical wing, the Telecom Engineering Centre (TEC), to undertake an infrastructure assessment or run checks if existing test labs are equipped to certify network gear under the mandatory testing and certification of telecom equipment (MTCTE) and National Security Directive on the Telecom Sector (NSDTS) schemes. This is being proposed in the context of locally manufacturing of telecom products, including optical line terminals, optical network terminals, repeaters, wireless radio links, WiFi access point equipment/controllers, in-building solutions and active/passive accessories.
