‘Made in China’ mobiles could be imported via ASEAN to evade duty

NEW DELHI: An Indian mobile handset body has alerted the government to the possibility of mobile phones being imported into the country via Vietnam, Indonesia and Thailand to evade customs duty, a trend that may hurt the ‘Make in India’ endeavour and allied investments.

The Indian Cellular Association cautioned the revenue department about the likelihood of fully built mobile phones being shipped in at zero duty from ASEAN countries, with which India has free-trade agreements, and sought immediate investigation into such moves, which it said could cause revenue loss to the government.

“We wish to bring to your notice the possibility of substantial case of customs duty evasion in the case of import of CBU (Completely Built Unit) of mobile phones from ASEAN countries, especially Vietnam, Indonesia and Thailand, at nil rate,” the Indian Cellular Association said in a May 24 letter to revenue secretary Hasmukh Adhia. EThas seen a copy of the letter.


“We strongly fear that very few of these are made in ASEAN. They could be of China origin… outside material is more than 65%, which means that the duty of 20% is being evaded to claim nil duty. The matter requires thorough independent investigation,” the industry body’s president Pankaj Mohindroo said.

He highlighted that more than twothirds of the components going into making the phones were from China and mere assembly of phones in an ASEAN country and import from there did not qualify for duty exemption.

Worried that such a modus operandi could threaten the Indian industry and endanger the government’s efforts to increase local manufacturing and investments, the industry body sought ‘immediate action.’

“The duty evasion under the FTA (free-trade agreement) means a revenue loss of 20% on this item. Further, the evasion means that the development of Indian industry is severely compromised,” the association said, without identifying any companies or entities.

It said such imports are usually by air and sought examination of flight data from Singapore, Kuala Lumpur, Hanoi, Saigon, Jakarta and Bangkok.

India has signed free-trade agreements with ASEAN countries Singapore, Malaysia, Indonesia, the Philippines, Thailand, Myanmar, Laos, Cambodia, Vietnam and Brunei. As per the agreements, mobile phone imports from these countries are not charged duty. A government appointed agency of the exporting country has to certify the device’s ASEAN origin and that local content is 35%, while non-ASEAN material can be 65%.

India imposed a 20% basic customs duty on fully built mobile phones from February 1to promote indigenous manufacturing of the devices. This was the third increase in duty on mobile phones within eight months.