Union Budget 2020: FM Nirmala Sitharaman may hike customs duties on more than 50 items
BusinessToday.In February 1, 2020
Finance Minister Nirmala Sitharaman may hike customs duties on more than 50 items comprising chemicals, electrical products and handicrafts in her second budget announcement.
The finance minister is likely to make this announcement in her budget 2020 speech as the government is aiming at nearly $56 billion worth of imports from China and elsewhere.
She may also make other announcements along with other measures to revive slackening economic growth.
The hike in import duty is expected to affect goods such as candles, handicraft items, industrial chemicals, jewellery, lamps, mobile phone chargers and wooden furniture, government sources told Reuters.
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.
IKEA had previously flagged higher Indian customs duties as a challenge.
The government had identified items and decided to increase import tariffs by 5%-10% as recommended by a panel of trade and finance ministry officials, among others, a government official told the news agency.
"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, defence and other sectors.
The Bharatiya Janata Party (BJP) has also asked the government to increase duties on non-essential items to boost local manufacturing.
"We expect the budget will address the issue of ... cheap imports under free trade pacts," Gopal Krishan Agarwal, the head of BJP's Economic Affairs Cell, told the news agency.
India's goods imports, which had been growing faster than exports in the last several years, fell around 8.90% during the April-December period from year-earlier levels, compared to a roughly 2% decline in exports.
This has helped the Modi administration cut its trade deficit that stood at $118 billion during April-December, down from $148 billion a year earlier.