Modi govt imposes another duty hike; cell phones, washing machines, more to get more expensive

In yet another move to save the rupee and protect the current account deficit from widening, the Modi government has hiked import duty today and this is set to increase the prices of everything from cell phones, ACs to washing machines. This order towards a more protectionist regime will also boost the PM's 'Make in India' programme.

The second such move by the government in a two week span, was announced late on Thursday to raise import barriers to curtail the import of goods it deems as "non-essential" items. The government hiked the import duty on certain communication items, including base stations, to up to 20 per cent, and the increased duties would be effective from October 12, the Central Board of Excise and Customs (CBIC) notification stated.

The import duty is said to have been hiked on certain inputs used in the communication industry like Printer Circuit Board Assembly (PCBA). Import duty on populated, loaded or stuffed printed circuit boards of all goods other than mobile phones, base station and optical transport equipments has been raised to 10 per cent, said the statement, adding that duty has also been raised to 20 per cent from 10 per cent for base stations and for machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, voice frequency telegraphy, digital loop carrier systems and multiplexers. 

The plan, which becomes effective from Friday, will potentially also hurt Indian telecoms carriers such as Reliance Jio Infocomm, Bharti Airtel and Idea, Neil Shah of tech research firm Counterpoint, told Reuters.

The latest set of increased tariffs could ratchet up trade tensions with the United States and China, among other countries and hurt the likes of network equipment makers such as Cisco Systems Inc, Huawei Technologies Co, ZTE Corp, Ericsson, Nokia and Samsung Electronics, according to Reuters.

"This will slow down the roll out of high-speed broadband which uses optical fibre and LTE networks," Shah told Reuters, adding however that it could help local telecom equipment makers like Tata Teleservices that manufacture some of this equipment locally.

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Last month, the government had raised import tariffs on 19 "non-essential items," including air conditioners, refrigerators, footwear, speakers, luggage and aviation turbine fuel, among other items.