Union Budget 2018 tech sector highlights: Customs duty increase on mobile phones, ‘cryptocurrency crackdown’ & more

With the move to boost domestic manufacturing, the government has increased the customs duty on imported mobile phones to 20 percent

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Highlights

    • The Union Budget 2018 focuses on agriculture & rural sector
    • Cryptocurrencies not considered legal tender
    • Certain mobile phones, TV parts and gaming consoles to be taxed more

The Finance Minister Arun Jaitley in the Union Budget 2018 speech tabled out several proposals for the financial year 2018-19. While the budget seems to be clearly “devoted” to agriculture and infrastructure, let’s take a quick look at what the FM had in store for technology sector.

The government has increased customs duty on imported mobile phones from the current 15% to 20% (iPhone would now be a lot more costlier). The move likely meant to boost domestic manufacturing of handsets will have an impact on premium smartphone brands like Apple that import most of their devices directly rather than assembling them here.

Notably, the government has increased the customs duty on mobile phone imports for the third time in less than a year. The first hike in import duty to 10 percent was announced in July 2017, followed by a rise to 15 percent in December the same year, and now it has been increased to 20 percent. While this sounds like a good news for adopters of ‘Make in India’ initiative, users who were planning to buy ‘imported mobile phones’ might have to reconsider their decision.

It is not just mobile phones that will attract higher customs duty. Certain imported TV parts will also have to bear 15% import duty from previous 7.5 to 10% levels. The blow is the hardest for prospective console gamers as the customs duty has been doubled to 20% on gaming consoles. While the move is justifiable in Mobiles and TV segment, it seems perplexing to say the least in the gaming segment.

In other news, the Finance Minister has stated that the government does not consider cryptocurrencies as legal tender. With the initiative to regulate cryptocurrency in the country, the government will take measures to eliminate the use of the ‘crypto assets’ and will also look at the potential use of blockchain technology. ‘Bitcoin trading’ has upsurged in the country in recent months and as per Financial Times, it witnessed nearly 10,000 users every month.

The Finance Minister also said that the government will explore Artificial Intelligence and machine learning technology. Mr. Jaitley announced that Niti Aayog will establish program to direct initiatives for developing AI.

The government has also proposed to set up to 5 lakh Wi-Fi hotspots under BharatNet, a project that aims at bringing high-speed fibre internet in the rural areas.