Phones, Smart Watches Set To Get Expensive As Centre Increases Duties

The central government said on Thursday it will raise import tariffs on several electronic items and communication devices, in another move to rein in imports and bolster a falling rupee.

The tariff hike, the second such move by the government in a two week span, was announced late on Thursday as it attempts to raise import barriers to curtail the import of goods it deems as "non-essential" items.

The latest set of increased tariffs could ratchet up trade tensions with the United States and China, among other countries and hurt the likes of network equipment makers such as Cisco Systems Inc, Huawei Technologies Co, ZTE Corp, Ericsson, Nokia and Samsung Electronics.

The gambit is part of a plan to contain a slide in the rupee, which has weakened more than 14 percent against the U.S. dollar this year, hit by an rout in emerging markets and other domestic factors such as a widening current account deficit.

It was not immediately clear how much of a tariff increase is being levied on each specific item, but the government listed several items that could be impacted including wearables like smart watches, Voice over Internet Protocol equipment and phones, and ethernet switches, among other items.

The plan, which becomes effective on Friday, will potentially also hurt telecoms carriers such as Reliance Jio Infocomm, Bharti Airtel and Idea, said Neil Shah of tech research firm Counterpoint.

"This will slow down the roll out of high-speed broadband which uses optical fibre and LTE networks," Mr Shah told Reuters, adding however that it could help local telecom equipment makers like Tata Teleservices that manufacture some of this equipment locally.

The move is the Prime Minister Narendra Modi government's latest tilt toward protectionism, as it promotes its 'Make in India' programme.

The government announced higher import tax on electronics products such as mobile phones and television sets in December, and then on 40 more items in the budget in February. These included goods as varied as sunglasses, juices and auto components.

Last month, it raised import tariffs on 19 "non-essential items," including air conditioners, refrigerators, footwear, speakers, luggage and aviation turbine fuel, among other items.