Govt mulls ban on unbranded Chinese mobile phones

Concerned over revenue loss due to rise in import of unbranded Chinese mobile phones that also poses security threat, the government is considering various steps, including strict surveillance of grey market deals and restriction on import of devices without proper code.

According to one estimate, the import of unbranded Chinese mobile phones valued at Rs 4,200 crore in 2009-10. This results in huge revenue loss to the government in terms of non-payment of Value Added Tax (VAT), Octroi and entry tax.

When contacted, senior officials in the Department of Telecom (DoT) confirmed government's view, saying "a grim scenario looms over the mobile industry with the intrusion of cheap Chinese imports".

The government is mulling over serious policy, regulatory and enforcement interventions to address the problems created by the grey market in mobile handsets which, otherwise has been a shining success of domestic manufacturing and robust export, they said.

Though no official estimates are available, sources said there was nil import of unbranded Chinese phones till 2006-07 but it rose to 5.5 million handsets valued at Rs 1,100 crore.

In absence of proper surveillance, imports increased to 12.4 million handsets in 2008-09 valued at Rs 2,500 crore and 20 million in 2009-10.

The trend has gained further momentum as the month of March alone witnessed import of nearly 3.5 million phones valued at Rs 700 crore.

In the interest of the nation and the domestic industry, the government must ensure that policies are put in place that promote manufacturing and employment in India along with robust revenue collection, sources in the DoT said.

They said that better implementation of IMEI (International Mobile Equipment Identity), regulation, a code that helps the telecom operators to identify valid devices, would also check check such practices.