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Why the Government has hiked import duty on 19 items?
Conducting business internationally not only gives a distinguished status in the local market, besides it assists the budding entrepreneurs and MSMEs to grab the global avenues for business expansion and growth. This further helps in export promotion and boosts the nation’s economy.
Evidently, with a unique Import Export Code, one can seamlessly grow your business at the international platform without any legal hindrances.
As a matter of fact, the policies of our government have always been aimed at augmenting the exports from our nation and to attain a desirable balance of trade.
In an effort to curb the current account deficit (CAD), the government on 26 September 2018 had introduced a hike in basic custom duty on 19 goods that are categorised as “non-core”.
- Some of them include electronic appliances like air conditioners and washing machines.
- Very strikingly, basic custom duty has been introduced on ATF (aviation turbine fuel).
#1. Which are the goods where import duty has been hiked?
The goods on which the government has hiked the import duty are listed in tabular form as below-
|
S.No. |
Particulars |
Custom duty (old)<%> |
Custom duty (new)<%> |
|
1. |
ACs & Refrigerators |
10 |
20 |
|
2. |
Washing machines<10kg |
10 |
20 |
|
3. |
ACs & Refrigerators compressors |
7.5 |
10 |
|
4. |
Speakers |
10 |
15 |
|
5. |
Footwear |
20 |
25 |
|
6. |
Radial tyres (car) |
10 |
15 |
|
7. |
Diamonds (Non-industrial, cut & polished) |
5 |
7.5 |
|
8. |
Diamonds (semi-processed, half-cut/broken) |
5 |
7.5 |
|
9. |
Diamonds (lab-grown) |
5 |
7.5 |
|
10. |
Colored gemstones (cut & polished) |
5 |
7.5 |
|
11. |
Jewelry (of precious metal or metal-clad) |
15 |
20 |
|
12. |
Goldsmith or silversmith articles |
15 |
20 |
|
13. |
Plastic bathroom ware (e.g. shower-bath, wash-basins, sinks etc.) |
10 |
15 |
|
14. |
Plastic package items (e.g. boxes, bottles, cases etc.) |
10 |
15 |
|
15. |
Plastic kitchenware, tableware |
10 |
15 |
|
16. |
Misc. plastic goods (e.g. stationery, furniture & fixtures, beads & bangles, decorative sheets etc.) |
10 |
15 |
|
17. |
Luggage carriers (e.g. briefcase, suitcase, trunks etc.) |
10 |
15 |
|
18. |
Aviation Turbine Fuel (ATF) |
0 |
5 |
#2. Why has the government imposed a hike in import duty on aforesaid goods?
The Central government has taken such stiff tariff measures, i.e. hike in the basic customs duties on certain non-core goods, in a bid to address the trade deficit.
The intent of the government, as per a statement by the Finance Ministry, is to bring down the imports on the said items by way of import substitution. These changes are solely aimed at narrowing the Current Account Deficit.
#3. What is the Current Account Deficit?
The current account deficit is a unit of measurement of a country’s trade, wherein the total value of the goods and services imported into the nation exceeds the total value of the goods and services exported by it.
Broadly, the current account deficit is the difference between the net inflow and outflow of the foreign exchange in a country’s economy.
#4. How much is the Current Account Deficit in India?
The decision of the government to hike custom duty is justifiable as the nation has witnessed a steep rise in Current Account Deficit (CAD) in the recent scenario.
- In the Fiscal Year, 2017-18 CAD had risen to 1.9% of GDP, i.e. $48.7 billion.
- In the FY 2016-17, it had jumped to 0.6% of GDP, i.e. $14.4 billion.
- As per the global credit rating agencies, India’s CAD is expected to shore up to 2.8% of its GDP by the end of FY 2018-19.
#5. How can the problem of CAD be solved?
The only solution to address the adverse impact of the CAD is import substitution. This can be done by boosting the value of its exports with respect to the value of imports by placing restrictions on imports. With this sole objective, the government has imposed hikes in basic custom duty on the specified goods.
#6. Will this decision help the economy?
Of course! The current decision will definitely boost the exports from India. This will truly boost the export businesses of electrical appliances such as ACs, washing machines & Refrigerators, where the duty has been doubled from 10 to 20%.
Surprisingly, the import duty @ 5% has been imposed on Aviation Turbine Fuel (ATF). The imports of ATF have put much pressure on the Indian economy in the recent years.
This has come as a huge relief for the exporters who can now scale up their business in the aforesaid goods with an IEC registration.
In case you need any assistance related to IEC Registration online, feel free to contact us at 8881-069-069.
