Duty hike will raise import costs, add to industry’s financial woes: COAI.

Telecom industry body COAI Friday said the import duty hike on certain communication products will increase industry’s import costs by about 10 per cent adding to financial woes, but asserted that operators are fully aligned to the interest of the nation. The Cellular Operators’ Association of India (COAI) — which represents all large operators in the country — estimates that industry’s imports bill for network equipment stood at about USD 2-3 billion over last two quarters, and that costs are expected to rise by about 10 per cent.

The government Thursday hiked the import duty on certain communication items, including base stations, to up to 20 per cent as part of efforts to check a widening current account deficit by curbing imports. This marks the second round of import duty hike announced by the government in about a fortnight. The revised duties would be effective from Friday.

“We hope this is a temporary situation, and once the crisis is over, the operators will get back to their regular rollout schedule. On critical infrastructure, obviously the operators will incur higher cost and it will hurt because of the financial health problem,” COAI Director General Rajan Mathews told PTI. Admitting that latest move would lead to 10 per cent increase in import cost for operators, Mathews said industry may “adjust” some of the planned rollout.

“It will increase the cost and financial challenges for the industry. Annually, operators import USD 8 billion worth of network equipment, and in the last two quarters they would have done a third of that…USD 2-3 billion worth of imports,” Mathews said. Import duty has also 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, has been raised to 10 per cent. 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.