Finance Minister P Chidambaram’s plan to levy higher customs duty on imports of non-essential items like electronic goods is not likely to materialise.
Commerce ministry has told the finance ministry that most electronic goods are covered under IT agreements with other countries and India unilaterally cannot raise duty rates.
In case of imports of precious, semi-precious stones and pearls, the curbs may not be possible because a significant portion of these items are exported back in the finished form/jewellery.
That leaves the finance minister mainly with consumer durables like television sets, refrigerators and air conditioners, but his officials fear they won’t have any significant impact.
“Duty increase on these items would just have a symbolic effect. It would not make much difference to the current account deficit,” said a finance ministry official.
Another fear is that if India increases duty on certain products, which hurts exports from a particular country, that country may retaliate by increasing duties on exports from India of another product.
At $31 billion, electronic goods comprised 6.3% of the total imports of $490 billion in 2012-13. Pearls, precious & semi-precious stones were $22 billion or 4.4% of the total imports.
Petroleum, gold and machinery comprised 34.4%, 11% and 5.5% of the imports, respectively. On gold, the duty has already been increased to 10% from Rs 300 per 10 gram in January 2012. The government has also raised duty on silver and platinum.
Last month Finance Minister P Chidambaram had said the government was looking at some compression in non-oil and non-gold imports, especially of non-essential goods.
Source:- business-standard.com
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