Budget FY22: Duty hiked on feature phones

The import duty on feature and button-operated mobile phones has been proposed to increase 15% supplementary duty for the upcoming fiscal year 2021-22.

The existing rate of tariff for supplementary duty in the case of imported feature phones is 10%. It has been proposed to make it 25%.

This will shoot feature phone prices up, and may bring the end of small scale mobile importers.

According to Finance Minister AHM Mustafa Kamal, during his speech on the national budget on Thursday, the duty hike was proposed to boost the local mobile handset manufacturing industry.

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"I am proposing to make the existing concessions on raw material import of this industry more investment friendly and rational and to increase the tariff on import of feature phones to protect the domestic industry," he remarked, while also proposing to exempt domestic mobile producers from value-added tax (VAT.)

“Currently, most of the mobiles used in the country are manufactured and assembled in this country. I am proposing to increase the existing VAT exemption facility for mobile phone manufacturing and assembling companies at the local level for another two years,” he added.

The total tariff will increase about 50% from existing 35%, told the Bangladesh Mobile Phone Importers Association (BMPIA),

BMPIA, an organization of domestic mobile handset importers, welcomed the decision.

“We have around 12 manufacturing factories that fulfill the local demand. If importing tariffs increases, local manufacturing companies will be inspired. Also, employment will increase which is necessary for our country,” said  Zakaria Shahid, the association's general secretary.

But the proposal is also adverse for mobile importers, he also said.

The small businessmen, or companies who are importing small quantities and doing business only depending on import, will be in trouble if this proposal is approved.

However, he also said that the National Board of Revenue (NBR) has to change the policy so that these small companies can ensure production of the same phones from local factories.

Despite the increase in the use of smartphones, about 70% of the total subscribers in the country still use feature phones.

According to the BMPIA, there is currently a handset market of more than Tk10,000 crore in the country.