Non-essential import list in the works

The government is likely to announce a list of non-essential items for higher import curbs later this week as part of the measures to check the widening current account deficit and stem the fall in the rupee.

By Our Special Correspondent
  • Published 18.09.18
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New Delhi: The government is likely to announce a list of non-essential items for higher import curbs later this week as part of the measures to check the widening current account deficit and stem the fall in the rupee.

Finance ministry officials said a higher duty may be imposed on items such as luxury cars, high-end mobiles, steel, finished steel, furniture, electronics and food items such as fruits and almonds.

The government is also weighing options to increase the import duty on gold. There are fears of a spike in smuggling if the duty is too harsh, which could lead to measure to discourage imports.

Subhash Garg, secretary in the department of economic affairs, is working on a comprehensive list of non-essential items. The government could discourage imports through safeguard duties or a minimum import price or by raising duties on certain items. Besides, the government is looking at import substitution in several sectors, including petroleum, defence and telecom.

In addition to merchandise, the Centre on Friday announced a slew of measures on the capital account front so that more dollars are infused into the economy, through routes such as external commercial borrowings, foreign portfolio investors and masala bonds.

However, these will work typically with a lag and are effective long-term tools.

The only narrow window the government has for immediate cooling of the economy is on the current account front through measures such as the import curbs.

The government could simultaneously take steps to boost exports. Exporters have long demanded incentives through export promotion zones and timely GST refunds.

Duty deadline

Officials said the government could further extend the deadline to impose a higher customs duty on 29 products from the US. In June, India decided to impose retaliatory tariffs from August 4, which was extended by 45 days till September 18.

"We are still in discussion with the US authorities. The deadline will be extended for another 45 days," the official said.

The duty hike move was in retaliation to a decision of US President Donald Trump to impose heavy tariffs on imported steel and aluminium items, a move that has sparked fears of a global trade war

Tax relief

The government on Monday exempted from income tax the interest payable on rupee denominated bonds issued outside India by a company or a trust to a non-resident or a foreign company, a move aimed at increasing the dollar inflow.

The interest will be exempt on rupee-denominated bonds issued outside India during the period from September 17, 2018, to March 31, 2019, the finance ministry said in a statement.

As per I-T law, interest payable by an Indian company or a business trust to a non-resident, including a foreign company, on rupee denominated bond issued outside India before the July 1, 2020, was liable for concessional rate of tax of 5 per cent.