WTO panel: India's import duty on mobile phones inconsistent with obligation

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

A WTO panel ruled that India's decision to impose import customs duty on communication products, including mobile phones, violated its obligation under the global trading system in a dispute with the EU, Japan, and Taiwan.

On April 17, a WTO dispute panel issued reports regarding the import tariffs imposed by the Indian government and said that India violated trade rules when it imposed tariffs on imports of communication products, including mobile phones, switches, routers, base stations, antennas, and parts for communication products.

WTO recommended that India bring such measures into conformity with its obligations under the GATT 1944.

Since Modi took office, India has begun imposing import tariffs on communications products under several initiatives, such as the Phased Manufacturing Programme for mobile phones, to encourage global manufacturers to invest in India and reduce India's reliance on imported goods. India's government claims that India is not a signatory of the Information Trade Agreement 2015 (ITA-2) and is free to impose import duties on these imported products.

The EU requested consultations under WTO with India in April 2019 before it requested the establishment of a WTO panel in February 2020. The WTO panel received third-party submissions from Brazil, Canada, Japan, Korea, Norway, Taiwan, Turkey, Ukraine, and the US in April 2021.

According to WTO, the panel found that the ITA does not set forth India's legal obligation at issue in this dispute and does not otherwise limit the scope of India's tariff commitments. However, the panel said India's tariff treatment of certain products classified under 850440 (static converters and telecommunication apparatus), 851712 (mobile phones), 851761 (base stations), 851762 (machines for reception, conversion, and transmission for regeneration of voice, images, or other data), and 851770 (parts for communication goods) is inconsistent with Articles II:1(a) and (b) of the GATT 1994.

Before the US-China trade war and the pandemic, the import duties helped India build one of the largest mobile phone ecosystems and boosted India's mobile phone exports. China-based mobile phone brands and Samsung Electronics decided to invest in India to gain a piece of India's huge mobile phone market and avoid the more than 20% tariffs on imported goods.