The Finance Ministry will, over the next few days, list out the goods on which there will be import curbs as part of the measures announced late on Friday to arrest the rupee’s slide.
“A committee is working on the list, and it is likely to be out within this week,” a top Finance Ministry official said here on Monday. The list could include steel, aluminium, wooden and other furniture, dry fruits, fresh fruits and alcoholic beverages, and other items. The Ministry is still to decide if gold should figure in this basket.
The curbs envisaged could be in the form of higher duty, but within the norms of the World Trade Organization (WTO).
One other option is to impose a safeguard duty (which aims to protect the domestic industry from ‘aggressive’ imports) on some items.
However, the precise quantum of the savings that such import curbs will bring about is yet to be ascertained.
The government had on Friday announced five measures to boost the rupee and to narrow the current account deficit (CAD). These include a relaxatin of the mandatory hedging condition for infrastructure loans; a review/removal of the limits on Foreign Portfolio Investors’ (FPI) corporate bond portfolio’s exposure to a single corporate group; waiver of the provision on withholding tax on Masala Bonds issued during the current fiscal; permitting manufacturing firms to avail of loans up to $50 million with a maturity of one year; and curbs on the import of non-essential items.
The import basket is currently divided into three categories: overall, non-oil and non-oil-non-gold. Oil and gold top the list of imported goods.
With the rupee having fallen by over 12 per cent in just this calendar year, the government faces the immediate challenge of a widening CAD. The deficit reached 2.4 per cent during the first three months (April-June) of the current fiscal, and is likely to rise further to 3 per cent this fiscal. Keeping all these in mind, Prime Minister Narendra Modi reviewed the economic situation on September 14-15, after which some initiatives were announced.
Medium-term benefits
The official was optimistic that the rupee will stabilise in the medium to long term.