The government has yet again increased import duty on several electronic items and telecom equipment to rein in current account deficit (CAD) and stabilise the rupee, the Revenue Department of the Finance Ministry said in a notification on October 11.
The hike will come into effect on October 12.
The finance ministry had last month increased import duty on high-end consumer items, including washing machines, air conditioner, footwear, diamonds, and jet fuel as a part of its plan to get foreign funds flowing back to India and to reduce CAD and stabilise the domestic currency.
While the total value of import of these 19 items in the year 2017-18 was about Rs 86,000 crore, the government is expected to earn around Rs 3,400 crore because of the hike in duty this year. This was before the import duty hike announced on October 11.
Restricting imports is a part of the government’s earlier announced five-point strategy to arrest the rupee’s slide. Prime Minister Narendra Modi met Finance Minister Arun Jaitley and officials Reserve Bank of India (RBI) among others, last month to review the current economic scenario to work out a strategy to bolster the market’s confidence and improve the macroeconomic scenario.
The measures included removal of withholding tax on masala bonds, relaxation for foreign portfolio investors, and curbs on non-essential imports, to contain the widening CAD, which has widened to 2.4 percent of the GDP in April-June and check the rupee’s fall.
The domestic currency has been falling continually over the last two months on the back of rising global oil prices, and concerns over current account deficit and capital outflows. On October 11, rupee closed at Rs 74.12 per dollar.
Copy of the notification given below:
