Smartphones among top 10 import items

Jigmi Wangdi

Figures from the Bhutan Trade Statistics (BTS) on the import of smartphones are alarming if not concerning. Smartphones are now among the top 10 commodities the country is importing. Import in 2023  was worth Nu 2.2 billion. 

The Bhutan Trade Statistics 2023 report states that the country imported 105,621 smartphones. This could mean that 1 in five literate Bhutanese bought a smartphone last year. This is derived from the literate population, assuming that this is the group purchasing smartphones.

According to the  National Statistics Bureau, Bhutan’s population is 770,276, out of which 71 percent of the population is considered to be literate, that is, 546,896 of the population. Taking this assumption, it means 1 out of five literate Bhutanese bought a smartphone last year. 

However, knowing that not all Bhutanese with a smartphone change their phone every year, the import figure is alarming if it is not imported to be exported.

Authorities concerned with export and import are saying that the import value is a cause for concern when both the quantity and corresponding value of smartphones surge exponentially vis-a-vis the population.

The BTS reports of 2019, 2020 and 2021 categorised smartphones under “Telephones for cellular networks or for other wireless networks” with an import value of Nu 0.5 million in 2019, Nu 1.6 billion in 2020 and Nu 2.4 billion in 2021.

It was only in 2022 that smartphones were categorised as a particular commodity. The BTS report found that Nu 1.9 billion worth of smartphones had been imported in 2022.

As there is no goods and sales tax (GST) levied on smartphones imported into the country, many say that the surge in import could be because Bhutanese licensed dealers or importers of smartphones are importing to export them to India. 

The GST rate on mobile phones in India is currently 18 percent with an additional 22 percent of import duty. This means that in India, Indians pay an estimated Rs 53,960 in taxes and duties for a Rs 134,900 iPhone 15 Pro. 

Alarmed with the import value, officials from the finance ministry along with law enforcement bodies investigated an issue where it was believed that Bhutanese smartphone dealers had been diverting the product to India. 

“Although the investigation couldn’t definitively confirm diversion into the Indian market due to the logistical challenges of intercepting such activities at entry and exit points, it did reveal that smartphones were being purchased in bulk by Indian visitors to the country,” said an official from the ministry. 

The official shared that prevailing laws do not prohibit such transactions, relating it to Bhutanese citizens crossing borders to buy goods from open markets.

However, acknowledging the disparities between import figures and population size, and noting specific loopholes in rules and regulations, a joint investigation report has proposed a series of recommendations to rectify and deter such unethical business practices.

The official added that these multifaceted suggestions aim not only to redress the observed irregularities but also to proactively forestall and mitigate the perpetuation of unethical business practices within the purview of the examined import dynamics.

Import of smartphones, especially iPhones is a concern because it drains convertible currency. Kuensel learnt from sources that two suppliers of Apple products (mainly iPhones) had been restricted from importing the products as they were under investigation for allegedly deflecting their products into the Indian market last year. 

The prohibition order was issued by the Royal Monetary Authority according to Section 43B of their Foreign Exchange Rules and Regulation of 2022, which states that the RMA would prohibit a person from accessing foreign reserves for a duration that will be determined by the RMA, on reasonable grounds of suspicion that import of goods and services are not meant for domestic consumption by Bhutanese.

Kuensel also learnt that one of the cases had been submitted to the Anti-Corruption Commission by the Department of Revenue and Customs. However, Kuensel was not able to get an update on the matter from the concerned agencies.