The Indian government is considering imposing a duty of at least 10 per cent on imports of smartphones to make locally made handsets more competitive and encourage domestic production as part of its Make in India campaign.

Officials from the ministries of commerce, revenue and IT said the government is close to making a final decision, The Economic Times reported.

The country’s custom duties currently make imported handsets 11.5 per cent more expensive than locally made models, but the gap is expected to narrow after a new 12 per cent goods and services tax (GST) is implemented.

Some ministries are pushing for an import duty of about 15 per cent, the newspaper said.

India’s attorney general argued smartphones aren’t covered by the Information Technology Agreement (ITA), therefore an import duty can be imposed. ITA is a global agreement exempting certain electronics products from import duties. It was signed in 1996, long before smartphones existed, so their duty-free status isn’t specifically stated.

The decision to impose a duty to keep imported smartphones more costly is welcome news for local producers, which have invested billions of dollars to set up and expand their facilities in India over the past two years only to endure rising competition from overseas vendors, notably manufacturers from China.

Such threats in April prompted Indian device makers to call for government aid, including anti-dumping duties.

Other non-Indian vendors are also investing in the country. Samsung recently confirmed it will invest INR4.9 billion ($760 million) in India to double its production capacity for handsets, a month after Apple began producing iPhones in the market. Apple’s output is reportedly between 25,000 and 50,000 units a month.

According to IDC, smartphone shipments in India increased 14.8 per cent year-on-year to 27 million units in Q1.