Mobile makers allege duty evasion in handset imports from Asean

The domestic cellphone industry has flagged possible duty evasion in imports of the completely built unit (CBU) of mobile phones, suspected of Chinese origin, from Asean countries under the free trade route.

In a letter to Revenue Secretary Hasmukh Adhia, Indian Cellular Association (ICA) said there is a possibility of customs duty evasion in import of CBUs from Asean countries at zero duty as the mobile devices contain more than 65 per cent material from non-Asean origin.

Government has imposed 20 per cent import duty on mobile phones to promote indigenous manufacturing of the devices as they have security implications.

"We wish to bring to your notice the possibility of substantial case of customs duty evasion in the case of import of CBU of mobile phones from Asean countries, specially Vietnam, Indonesia and Thailand, at nil rate," ICA National President Pankaj Mohindroo said in the letter.

India has signed free trade agreements with Asean countries which covers Singapore, Malaysia, Indonesia, the Philippines, Thailand, Myanmar, Laos, Cambodia, Vietnam and Brunei.

Besides, there is a special dispensation for the Philippines which is charged a duty of 2-6 per cent. Other nine countries are largely under the special dispensation of zero duty.

Mohindroo said the zero-duty treatment is available only after a government appointed agency of the exporting country gives a certificate that the device is of Asean origin.

ICA said a product is considered to be of Asean origin if it is produced by its member country, local content by direct method should be 35 per cent and non-ASEAN material can be 65 per cent in the device.

Mohindroo said ICA feels that very few mobile phones are made in Asean.

"Even if the final product is assembled in Asean, the components of the parts are certainly of China origin. Thus, outside material is more than 65 per cent which means that the duty of 20 per cent is being evaded to claim nil duty for an item which fails to fulfil the origin criteria," he said.

ICA had demanded immediate investigation into the matter and examination of flight data from Asean countries, as mobile phones are mainly imported by air.