The consumer durables industry fears that the plan to make India a global sourcing hub could be hindered in the wake of appreciating rupee and customs duty cut on finished products.
“Increase in the value of rupee puts the industry at a disadvantage, especially companies like Samsung and LG which have invested heavily in India,” Consumer Electronics and Appliances Manufacturing Association (CEAMA) Secretary General Suresh Khanna told PTI.
He said Indian exports have become uncompetitive in the global market and this is obstructing plans of companies to make India their global sourcing hub.
“There are chances that the investment being made by export-oriented companies might go down resulting in loss of employment opportunities in the country,” he said.
Khanna pointed out that the removal of additional four per cent duty on imported finished products has put at a disadvantage the entire domestic industry as well as multinational companies which have invested in India heavily.
“As domestic manufacturing becomes costlier than importing, the industry is being hit from two sides because of the dollar going down against rupee and removal of additional duty on imports,” he added.
Indian rupee is trading at a nine-year high against the dollar and has risen more than 10 per cent in 2007, making imports cheaper but hurting exports. Besides, the government early this month withdrew the 4 per cent special additional duty on imports of all goods covered under state-level Value Added Tax. This will make such goods, especially electronic items like computers and mobiles, cheaper.