India: Govt hikes customs duty on 19 items

  • India raised import duty on a range of items including air-conditioners, refrigerators, washing machines, footwear, jewellery, furniture fittings and tableware besides imposing it on aviation turbine fuel (ATF) as the government seeks to rein in the current account deficit and shore up the rupee.
  • The move follows an announcement to this effect by finance minister Arun Jaitley earlier in Sep 18 after a meeting with Prime Minister Narendra Modi in the wake of the slump in the rupee against dollar.
  • Basic customs duties have been raised on 19 tariff lines that accounted for an import bill of INR860bn in FY18 by 2.5%-10%. Basic customs duty of 5% has been imposed on ATF.
  • The prices of jet fuel will be increased by INR2,000 per kilolitre from 27 Sep 18, oil refiners have communicated to airlines. The move will likely make air travel more expensive.
  • The government’s decision to double the basic custom duty on ACs, refrigerators and washing machines to 20% from the existing 10% would encourage domestic manufacturing, said the Consumer Electronics and Appliances Manufacturers Association (CEAMA).
  • The basic customs duty on compressors and speakers are also raised to 10% and 15%, respectively from 7.5% and 10%.
  • The moves comes into effect on 27 Sep 18, a finance ministry release said. The prices of all these goods are expected to rise, dampening demand, lowering imports and helping local manufacturers.
  • India’s current account deficit deteriorated to 1.9% of GDP in FY18 from 0.6% in FY17 and is forecast to rise to around 2.8% in FY19.
  • Given the uncertain global environment, emerging economies running high current account deficits have seen their currencies depreciate sharply amid interest rate increases by the US Federal Reserve, higher crude prices and an intensifying global trade war. The Indian rupee is down about 13% since Jan 18.

External Link: https://economictimes.indiatimes.com/news/economy/policy/government-hikes-customs-duty-on-19-items-to-curb-widening-cad/articleshow/65968379.cms

External Link: https://economictimes.indiatimes.com/news/economy/policy/hike-in-custom-duty-may-impact-coming-festive-sales-consumer-durable-industry/articleshow/65971326.cms

27-Sep-2018


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