Budget 2020 stimulus measures: Import duty hike is on cards

Published: January 25, 2020 7:16:02 AM

Budget 2020 India: The move could hit smartphone manufacturers that still import chargers or other components such as vibrator motors and ringers, along with retailers such as giant Ikea that is in the process of expanding its footprint in India.

Budget 2020, Import duty hike, Nirmala Sitharaman, Ikea, smartphone manufacturers, import chargers, import tariffs, India tariff linesA spokesman for the finance ministry and a spokeswoman for the commerce ministry declined to comment.

By Aftab Ahmed & Manoj Kumar

Union Budget 2020 India: The government plans to increase import duties on more than 50 items, including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere, officials and industry sources said.

Finance minister Nirmala Sitharaman could make the announcement when she presents her annual Budget for 2020-21 on February 1, along with other stimulus measures to revive sagging economic growth, one of the government officials said.

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Higher customs duties are likely to hit goods such as mobile phone chargers, industrial chemicals, lamps, wooden furniture, candles, jewellery and handicraft items, two government sources with direct knowledge of the matter said.

The move could hit smartphone manufacturers that still import chargers or other components such as vibrator motors and ringers, along with retailers such as giant Ikea that is in the process of expanding its footprint in India.

Ikea had previously flagged higher Indian customs duties as a challenge. The government had identified items and decided to increase import tariffs by 5%-10% as recommended by a panel of trade and finance ministry officials, among others, the second government official said.

“Our aim is to curb imports of non-essential items,” said the official, adding a hike in import duties would provide a level playing field for local manufacturers-hit by cheap imports from China, the Association of Southeast Asian Nations (Asean), and other countries that enjoy trade pacts with India.

The sources asked not be identified as the discussions were private. A spokesman for the finance ministry and a spokeswoman for the commerce ministry declined to comment. Since taking charge in 2014, Prime Minister Narendra Modi has imposed several restrictions on imports while allowing more foreign investment in manufacturing, defence and other sectors.

The ruling Bharatiya Janata Party (BJP) has also asked the government to increase duties on non-essential items to boost local manufacturing. “We expect the budget will address the issue of … cheap imports under free trade pacts,” Gopal Krishan Agarwal, the head of BJP’s economic affairs cell, told Reuters.

A committee of trade ministry officials in consultation with local industries had initially planned to target more than 130 items accounting for roughly $100 billion worth of imports, but it has since pruned the list, the first official said.

The government is separately considering imposing “quality standards” on imports as less than 10% of India’s tariff lines are regulated for safety, health and environmental standards, an industry official, who is participating in the pre-Budget consultations, said.

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