Grey sales of high-end phones causing revenue loss of Rs 2,500 crore: ICEA

Sale of high-end mobile phones in the grey market is causing an estimated loss of Rs 2,500 crore annually to the exchequer, said mobile industry body India Cellular and Electronics Association. The ICEA has suggested imposing a maximum customs duty of Rs 4,000 on handsets priced above Rs 20,000 to discourage duty evasion and wipe out the premium for illegal sales. A basic customs duty (BCD) of 20 per cent is imposed on imported handsets at present. “High-end phones that are getting sold in the grey market are estimated to cause a loss of Rs 2,500 crore annually on account of non-payment of basic customs duty (BCD) and also goods and services tax,” said Pankaj Mohindroo, Chairman, ICEA.

The industry body has requested Finance Minister Nirmala Sitharaman that the BCD of 20 per cent should continue but with a cap of Rs 4,000 on mobile phones priced above Rs 20,000, Mohindroo said. The step will wipe out high margins on the illegal sale of high-end handsets and give a boost to legal imports, the ICEA has reasoned. “Revenue impact on this would be an additional duty of Rs 700 crore of BCD approximately, which will get netted off because of the reduction in duty on the legal import. Hence, there will be no net gain or net loss. The GST collection will, however, go up by over Rs 1,000 crore and the market environment will become much cleaner and regularised,” Mohindroo said. The ICEA said

that recent budget was focussed on promoting electronics manufacturing in the country with a provision to write off capital expenditure for under section of 35 AD of Income Tax act. “The entire mobile phone and its components manufacturing ecosystem should be brought under the finally notified scheme,” he said.n