Prices of mobile handsets (both GSM and CDMA) are expected to drop by 8-10 per cent in the next few weeks following the reduction in customs duty to 5 per cent from 10 per cent and the abolition of 4 per cent special additional duty (SAD). The reduction in prices will be higher on the costlier handsets than the lower priced models.

The reduction in prices will lower the difference in prices between the official and the grey markets, says Pankaj Mohindroo, National President, Indian Cellular Association, the apex body of all the handset manufacturers. If the customs duties are further reduced in keeping with India's WTO commitment, it could help virtually eliminate the grey market

Moreover, telecom service providers, whether providers of basic telephony, cellular or WLL-based, will benefit from the exemption in customs duty granted to specific infrastructure equipment, which will enable them to cut down their costs in upgrading their infrastructure and services. The reduction in duties for infrastructure equipment for basic/cellular/internet, V-SAT, radio paging and public mobile radio trunked services, and exemptions from duty for raw materials in optic fibre cables will benefit the entire sector .

The major beneficiary, of course, would be the Indian consumer.