Reliance Jio has rubbished allegations that it was trying to evade import duties by taking alternative trade routes to ship in its 4G feature phone Jio Phone, saying it manufactures all those handsets in India.
Jio was responding to allegations by Indian mobile handset companies led by The Mobile Association (TMA) that claimed that Mukesh Ambani-led Reliance Industries was not making the Jio Phone locally.
“Jio Phone devices are not made in India. As per our understanding, Jio Phone devices are all imported from China. The telecom service provider (Jio) is now planning to import large volumes via Indonesia to enjoy 0% customs duty,” Bhupesh Raseen, chairman of mobile advisory committee at The Mobile Association, told ET.
Raseen added that a move to ship fully-assembled devices from China via the country that is part of a block of 10 Association of Southeast Asian Nations (Asean) countries – with whom India has a free trade pact – would harm the government’s Make in India programme in which local firms have invested hugely. India imposes a 20% basic customs duty on fully-built mobile phones shipped in from other markets, like China.
TMA is also planning to meet finance minister Arun Jaitley and top ministry officials to express the pressing concern, he added.
Earlier this month, Ambani announced the Jio Phone, its basic model of the 4G feature phone, will be sold for Rs 501 in exchange for any feature phone from July 21. He also announced an upgraded Jio Phone 2, priced at Rs 2,999, to be available from August 15. The company aims to take its base of 25 million Jio Phone users to 100 million.
“Jio Phone 2 to be available at an introductory price of R 2,999 from August 15, 2018, is being manufactured in India. Jio Phone is also manufactured locally in India now,” a company spokesperson said.
The association said if Jio was permitted to offer a feature phone at a much lower price point, the businesses of mobile vendors like Karbonn, Lava, Jivi Mobiles and nearly 100 other brands will be rendered “uncompetitive and unviable overnight”. It may even force the Indian brands, who rely for a bulk of their revenues on sales of feature phones, to shut down their manufacturing and sales operations completely.
Jio Phone is already the highest selling featurephone in India currently. In Q4 2017, over a fourth of all feature phones sold in India were Jio Phone, as per Counterpoint Research.
Another handset body, India Cellular Association (ICA), has also raised similar concerns and cautioned the revenue department about the likelihood of fully built mobile phones being shipped in at zero customs duty from Asean countries to evade duties, without naming any specific company.
The free trade agreement between the Asean region and India came into effect on 1 January 2010 as countries such as Singapore, Indonesia, Malaysia and Thailand and others expand their economic ties in the Asia Pacific region to foster trade, and import of mobile devices from these countries comes duty-free.