NEW DELHI: The government has imposed a 10% basic customs duty (BCD) on imported chargers and adapters, while exempting parts or raw material used for making these products out of the duty ambit. The move reinstates an advantage that local manufactures had before the introduction of GST.

The industry welcomed the move, saying the step would provide stimulus to local manufacturing and take care of a loophole in rules that allowed for the import of chargers or adapters without paying any duty. The revenue department said a rule was being amended to state that exempt goods would include “static converters for automatic data processing machines and units thereof, and telecommunication apparatus, other than static converters for cellular mobile phones,” as per a notification dated July 14.

“This ensures that BCD of 10% is imposed on imported mobile chargers or adapters. The revenue department has taken up this matter in no time in favour of the nascent charger or adapter manufacturing industry,” said Pankaj Mohindroo, the national president of the Indian Cellular Association, which represents handset makers including Apple, Samsung and Micromax.

The move would create a duty differential in the current tax regime which was being offered pre-GST by imposing a countervailing duty of 12.5% on imports.

Mohindroo said the amendment would effectively stop import of chargers or adapters under zero duty through an incorrect interpretation of the Information Technology Agreement (ITA) that these products were covered under ITA 1— a global agreement under which countries have committed to exempt certain electronic and telecom products from customs duty. India is a signatory to ITA.

“This has ensured that the intent of the Phased Manufacturing Programme (PMP) is not lost,” he added. The programme is a roadmap laid out by the government that offers tax benefits to those making mobile phones and mobile phone components within the country. It seeks to increase local value addition to 35-40% from the current 6%, besides lending a helping hand to India becoming an export hub.