A powerful US trade body has lobbied the top trade negotiator in the Obama administration to dissuade India from imposing a 10 per cent customs duty on specified telecoms gear. This would flout the South Asian nation's World Trade Organisation (WTO) treaty commitments and possibly weaken the country's ability to implement the Digital India project, it said.

The US-India Business Council (USIBC), in a confidential letter to US Trade Representative Michael Froman seen by ET, said India must "rescind its recent notification that levies a 10 per cent tariff on a broad range of telecom equipment" since the products fall under the "purview of the WTO Information Technology Agreement (ITA), and should therefore, continue to receive duty-free treatment as per India's ITA obligations". The USIBC couldn't be immediately reached for comment. The 10 per cent customs duty was among finance minister Arun Jaitley's 2014 budget proposals. It will primarily apply to 3G and 4G systems, including switches and broadband equipment.

If implemented, it is slated to raise the debt-laden telecom industry's annual capex outflows by at least an additional Rs 1,000 crore, the industry has warned. In its letter to Froman, USIBC warned that the notification harms India's vibrant telecom industry by "debilitating foreign direct investment ( FDI) in the sector" and prevents the most updated telecom products from entering the country. Some of USIBC's leading technology member companies include Cisco Systems, Google, Intel, IBM, AT&T, Qualcomm, Apple, Verizon, Nokia, Juniper Networks, Dell, Microsoft and Texas Instruments.

A top DoT official, however, said much thought had gone into the 10 per cent duty proposal, and the government took care to exclude from its purview all "electronics/telecom items" where India has a zero import duty commitment under WTO's ITA pact. In fact, "the duty will apply to telecom products which were not even invented at the time India inked the ITA back in 1997," he added. The USIBC's letter to US President Barack Obama's top trade negotiator comes at a time when American tech giants, including Google, Facebook, Microsoft and Hewlett-Packard have been swiftly queuing up to get a piece of Prime Minister Narendra Modi's Digital India project that aims to deliver high-speed internet access across the country including remote areas.

Earlier this month, the Department of Electronics & IT (DeiTY) included 'mobile phones' in its expanded Compulsory Registration Order (CRO), which empowers the government to conduct spot checks on imported cellphones to establish validity
of registration.

Source: economictimes.indiatimes.com