New Delhi, Aug. 9: Gizmo geeks and car aficionados had better get ready to fork out more for their iPads and Ferraris.
The currency crisis that has roiled the rupee has forced the government to cobble plans to raise import duties on a range of products from gleaming Maybachs to high-priced tablets and gaming consoles.
The Spook of an economic slowdown is about to cast its shadow on the Rolls Royce Phantom.
Finance minister P. Chidambaram today went into a huddle with top officials from the finance and commerce ministries to discuss ways to trim the $192-billion trade deficit.
Sources spoke about the imminent announcement of a slew of import duty increases that will cover cars, electronic goods, machinery, and even imported coal to rein in its current account deficit that swelled to 4.8 per cent of the GDP in March.
Finance ministry officials said they were hashing proposals to raise the tax on car imports. That means the import duty on completely built units would rise from 102 per cent to between 130 and 200 per cent.
Luxury carmakers like Rolls Royce and Maybach-owner Daimler AG will be the hardest hit along with a cavalcade of Porsches, Volvos, and top-end Mercedes and BMWs. High-end cars that are imported in completely knocked down kits and assembled in plants in India could also be impacted.
A tariff increase could raise howls of protest from European carmakers. Most others either produce or assemble most of their models locally.
Officials said an inter-ministerial committee had already submitted its recommendations and the finance ministry would soon announce the changes. The move is designed to cut India’s reliance on imports. The trade gap in the April-June 2013 period stood at over $50 billion, suggesting that the deficit for 2013-14 might cross $200 billion.
The move is part of a strategy to prop up the rupee, which fell to 61.80 against the dollar last Tuesday, by narrowing the trade deficit.
The import duty hikes will particularly target electronic goods .
Currently, mobile phones, computer processors and hard disks attract an import duty of 6.03 per cent, while iPads, laptops, computers and computer printers are subject to a levy of 16.85 per cent. iPods, video games and gaming consoles are imported at a duty of 28.85 per cent.
The government intends to increase the total tax on them by one-sixth to a half.
A structured set-up, which imposes higher taxes on finished capital goods and electronics and lower taxes on components, could impact several well-known makers of mobiles and laptops, including HTC and Apple.