The government on Wednesday announced a hike in customs duty on select items to curb “non-essential imports” and narrow the current account deficit. The move will be applicable to 19 items, such as aviation turbine fuel (ATF) and consumer appliances such as television, refrigerator, air conditioner, washing machines, speakers, radial car tires, jewelry items, kitchen and tableware, certain plastic goods, and suitcases. and speakers. The revision in customs duty tariffs – or taxes applicable to imports – will take effect from midnight, an official statement said. The move is in line with the government’s aim to bring down non-essential imports to contain the current account deficit and capital outflows.
Total import bill on account of shipment of these items into the country last fiscal was Rs 86,000 crore, the Finance Ministry said in a statement.
“The central government has taken tariff measures, by way of increase in the basic customs duty, to curb import of certain imported items. These changes aim at narrowing the current account deficit (CAD). In all the customs duty has been increased on 19 items,” the ministry said.
The current account deficit, the difference between inflow and outflow of foreign exchange, widened to 2.4 percent of GDP in the April-June quarter.
Crude oil prices at new four-year highs along with prevailing weakness in the rupee – which is down more than 13 percent so far this year – led to the widening of the current account deficit.