Japan has lodged a complaint with the World Trade Organisation about India’s duties on mobile phones, base stations and routers, and their components, the WTO revealed in a filing on Tuesday. Japan’s complaint to the trade body accuses India of imposing duties – to foster domestic production – that are “clearly in excess of bound rates” and which “nullify or impair the benefits accruing to it directly or indirectly”. It says that India’s policies and tariff increases though the Customs Act are inconsistent with its Schedule of Concessions and Commitments annexed to the General Agreement on Tariffs and Trade (GATT). GATT is a legal agreement between many countries, whose purpose is to promote international trade by reducing or removing trade barriers such as tariffs.
“Especially since announcement of the ‘Make in India’ campaign in September 2014,” the complaint reads, “India has continuously and systematically raised import duties on a wide range of products in various sectors, such as electronics systems, mining, automobiles, renewable energy, defense manufacturing, food, processing, automobile components, and textiles and garments.”
What Japan is taking issue with
Here are the list of specific products that Japan, in its complaint, accuses India of taxing unfairly:
1. Cell phones: India applies a 20% duty to telephones for cellular networks or for other wireless networks under the First Schedule to the Customs Tariff Act, 1975 (“First Schedule”), which clearly exceeds the applicable bound rate of 0% set forth in India’s Schedule of Concessions and Commitments under GATT (“India’s Schedule”).
2. Base stations: India applies a 20% duty to base stations under the First Schedule, which clearly exceeds the applicable bound rate of 0% set forth in India’s Schedule.
3. Other voice and data equipment: India applies 20% or 10% duties, depending on the product, on machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus, which clearly exceeds the applicable bound rate of 0% set forth in India’s Schedule.
4. Circuit boards: India applies 10% duty to populated, loaded or stuffed printed circuit boards under the First Schedule, which clearly exceeds the applicable bound rate of 0% set forth in India’s Schedule.
5. Other components: India applies 10% or 15% duties, depending on the types of products, to parts of telephone sets and other apparatus for the transmission or reception of voice, images or other data other than populated, loaded or stuffed printed circuit boards under the First Schedule, which clearly exceeds the applicable bound rate of 0% set forth in India’s Schedule.
Legal basis for the complaint
Japan said India’s import duty hikes are inconsistent with its obligations under GATT because:
- India has failed to accord to the commerce of another member country treatment that is no less favourable than that provided for in the appropriate part of India’s Schedule
- India has failed to exempt products of another member country from ordinary customs duties in excess of those in India’s Schedule
- India has failed to exempt such products from all other duties or charges of any kind, imposed on or in connection with the importation, in excess of those imposed on the date of the GATT 1994 or those directly and mandatorily required to be imposed thereafter by legislation.
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