India under pressure to roll back import tariffs on smartphones

indexSource: The Hindu Business Line, Nov 12, 2017

New Delhi: Pressure on India to roll back import duties imposed on smart phones has increased at the World Trade Organisation (WTO) with several countries complaining that rules were bent and the US expressing concern over alleged ‘lack of transparency’.

“The US representative stated that any business looking for information on India’s tariff on mobile phones or base stations would assume that India’s tariff on these products is zero and would have no way of knowing that India raised the duty to 10 per cent,” a Geneva-based official, following the recent meeting of WTO Committee on Trade in Goods, told BusinessLine.

The US further said that large multinational companies have been struggling to figure out India’s duty structure because of lack of transparency and it would be so much more difficult for a micro, small, or medium-sized business to understand the change, the US added.

Both India and China came under fire at the WTO from members including Japan, the EU, Canada, Chinese Taipei, Norway, Vietnam, Thailand ,Singapore, Korea and Australia who renewed their calls for the two countries to fulfil their commitments under the WTO’s Information Technology Agreement (ITA).

According to the ITA, signatories, which include India, are not to impose import duties on a number of IT products which include mobile phones. New Delhi, however, imposed a 10 per cent import duty on smart phones and base stations to protect its domestic industry and foreign investors who have invested in the country.

India, in response to the complaints said that it was open to discuss technical aspects and products’ classification with the members concerned. It also maintained that it was important to keep in perspective the technological advancements in IT products since they were first listed in the ITA and that the products in question were not in the list that India agreed to under the ITA.

 Challenges ahead
If members continue to be dissatisfied with India’s explanation and lack of action, they may drag the country to dispute settlement and a panel at the WTO would then decide whether rules were bent. In case a decision is taken against India’s actions, it will have to roll back the duties or face penalties.

China, in response to the critics, reiterated its explanation that the tariff increase on integrated circuits was due to the transposition of its tariff schedule to an updated list.

 

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