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January 25, 2020

India likely to raise import duties on 50 items in Feb

Business

January 25, 2020

NEW DELHI: India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere, Reuters quoted officials and industry sources, as saying.

Finance Minister Nirmala Sitharaman could make the announcement when she presents her annual budget for 2020/21 on February 1, along with other stimulus measures to revive sagging economic growth, one of the government officials said.

Higher customs duties are likely to hit goods such as mobile phone chargers, industrial chemicals, lamps, wooden furniture, candles, jewellery and handicraft items, two government sources with direct knowledge of the matter said.

The move could hit smartphone manufacturers that still import chargers or other components such as vibrator motors and ringers, along with retailers such as giant IKEA that is in the process of expanding its footprint in India.

“Our aim is to curb imports of non-essential items,” said the official, adding a hike in import duties would provide a level playing field for local manufacturers-hit by cheap imports from China, the Association of Southeast Asian Nations (ASEAN), and other countries that enjoy trade pacts with India. Since taking charge in 2014, Prime Minister Narendra Modi has imposed several restrictions on imports while allowing more foreign investment in manufacturing, defense and other sectors.

A committee of trade ministry officials in consultation with local industries had initially planned to target more than 130 items accounting for roughly $100 billion worth of imports, but it has since pruned the list, the first official said.

The government is separately considering imposing “quality standards” on imports as less than 10 percent of India’s tariff lines are regulated for safety, health and environmental standards, an industry official, who is participating in the pre-budget consultations, said.

Ahead of the budget, the trade ministry has also asked the finance ministry to consider a Border Adjustment Tax (BAT) on imported goods to level the playing field for domestic players that also have to pay local taxes like electricity duties and levies on fuel, the second government official said. The official added this could be imposed on top of any tariffs further raising the costs of imported goods. Last July, the government raised import tax on more than 75 items, including gold and automobile parts, in its post-election budget.

India’s goods imports, which had been growing faster than exports in the last several years, fell some 8.90 percent during the April-December period from year-earlier levels, compared to a roughly 2 percent decline in exports.