Economy

Customs duty hike impacts imports worth $8.9-billion

Amiti Sen New Delhi | Updated on February 05, 2020 Published on February 05, 2020

Scope for more coverage as tariffs have been increased for 111 of over 300 items proposed, says official

Hike in import duty announced in the Budget affected 111 items that accounted for inflow of goods worth $8.87 billion last year, as per a government calculation.

“The overall impact of the duty increase will not be significant as it will affect only about 2 per cent of imports. But individually it is aimed to give a boost to manufacturing, as diverse goods, ranging from footwear and furniture to locks and blowers, have been covered,” an official told BusinessLine.

The Commerce Ministry had submitted a list of about 300 items to the Finance Ministry, suggesting a possible increase in import duties as part of a pre-Budget consultation process.

“There are obviously a number of items on which the Finance Ministry did not, at the moment, deem it fit to increase import duties. However, whether the duties will be increased in the days to come is something that is uncertain,” the official said.

Boost for small players

Items on which a duty increase was proposed but not brought about include rubber and rubber items, as well as many paper products.

Customs duty has been hiked to 20 per cent from 10 per cent on most electric home appliances, such as toasters, coffee and tea-makers, electric heating resistors, insect repelling machines, hand-drying apparatus, hair-dryers and hair-dressing apparatus, water heaters, food grinders, electric inverters, air purifiers, freezers, air circulators, blowers and all kinds of fans from 10 per cent to 20 per cent.

“There are a large number of domestic companies in the electric home appliances segment. The move will definitely give a boost to such units,” the official said.

Duties hiked for footwear, locks, toys

While most categories of footwear too have been brought under higher import tariffs of 35 per cent, giving a leg-up to small-scale manufacturers, the traditional lock-making industry, too, may now see higher demand as a variety of locks such as padlocks, locks for furniture, combination locks and other locks, with imports at close to $72 million in 2018-19, will attract higher import duties of 20 per cent.

Duties have also been increased on toys and recreational models to 65 per cent, which will have a substantial impact on imports. Such products worth $635 million were imported in 2018-19, mostly from China.

Colour TV picture tube, headphones and solar cells, which were zero per cent duty items, will now attract import duties of 10 per cent, 15 per cent and 20 per cent respectively.

Import duty on parts of microphones, however, has been reduced to zero from 10 per cent to correct inverted duty structure and encourage domestic production of microphones.

India’s total goods exports posted a 9.06 per cent growth to touch a new high of $330 billion in 2018-19, but imports grew at 10.41 per cent to $514 billion, widening the trade deficit.

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Published on February 05, 2020
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