India's mobile handset association, fighting to shake off the smuggled market's stranglehold on new buyers, urged the government on Wednesday to lower import duties to boost growth.
The Indian Cellular Association, which bands some 20 handset makers such as Nokia and Motorola Inc, expects Indians to buy 4.4 million mobile phones in 2002 and 9.5 million units next year.
But the association says it expects only 25 per cent or 1.1 million handsets to be bought legally this year and the rest from the "grey" or the smuggled goods market, which does not pay the 14.4 per cent import duty charged by the government.
"We've urged the government to cut the basic import duty on handsets from 10 per cent to five per cent and also remove the special additional duty," Pankaj Mohindroo, president of the association, told a news conference.
"If duties come down, then mobile prices across the board will drop by 20 to 25 per cent and teledensity will surge."
In addition to the import duty, states also levy a 4.0 to 20 per cent sales tax on mobile phones, which raises the price of a legally bought handset by Rs 500, Mohindroo said.
Mobile sets in the grey market are available for as little as Rs 4,000 but the price of the same piece is about Rs 4,500 in the legal market.
"It's in nobody's interest that duties are higher and the government incurs a loss due to smuggling," Mohindroo said.
India, with its billion plus people, has more than 9.0 million cellular users.
Analysts expect the number to grow to 12 million by March 2003 and 120 million by 2008, making India's cellular sector one of the fastest growing markets globally in this decade.
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