India defends duties on telecom products

Source: The Hindu Business Line, Dec 11, 2016

New Delhi: India has defended its decision to impose import duties on four telecom products, including voice over internet protocol phones and optical transport equipment, brushing aside claims made by the EU, the US and Japan that these are covered under the IT Agreement (ITA-1) of the World Trade Organisation and should be duty-free.

New Delhi, in a recent meeting at the World Trade Organisation, said that while the argument put forward by the three WTO members claiming that the items fell under the codes that are covered under the ITA 1 could be valid, the products were outside its mandate as they did not exist when the pact was signed.

“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,” India said in its representation. It added that when ITA 1 was negotiated, the code for telecom equipment (HS Code 8517) referred to telecommunication apparatus for “carrier-current line systems and digital line systems”.

However, in the last few years, several new technologies have been developed. Subsequently the said code has been expanded to include new technological developments.

“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,” it said.

New Delhi’s firm stand on the matter would discourage future challenges by WTO members if it chooses to impose duties on newly developed IT and telecom equipment that fall under categories covered under the ITA 1.

10% import duty
In July 2014, India had imposed 10 per cent 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.

Not a part of ITA 2
India’s representation further added that to cover products that had evolved after 1996, several WTO members had signed the ITA 2, of which it was not a part.

The country decided to stay away from ITA 2 as it had a bad experience with ITA 1 which required member countries to bring down import duties on several IT products to zero. The agreement gave a severe blow to India’s electronics and IT hardware industry which could not develop to its potential due to cheap items coming in from countries such as China, the US and South Korea.

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