Post Date : January 19, 2021
As India after the pandemic ties its hopes to the upcoming Budget 2021 for recovery, sources on Monday informed that the Centre might hike import duties by 5-10% on more than 50 items including smartphones, electronic components and appliances.
It is believed that the move to impose high import duties is in line with PM Modis’ “Self-reliant India” Campaign, which aims to promote and support domestic manufacturing.
One of the sources said that the government was seeking to target additional revenue of about INR 200 billion to 210 billion ($2.7 billion to $2.8 billion) from the moves, as it looks to shore up revenue amidst the pandemic-driven slowdown that has stung the economy.
Two of the government sources also said the duty hikes could impact furniture and electric vehicles, potentially hurting the likes of Swedish furniture maker Ikea and Tesla, which is planning to launch its cars in India this year.
However, the officials did not specify how much of a hike was planned on furniture and electric vehicles.
Both Ikea and Tesla executives have previously expressed concerns about the steep duty structure their products already face in India.
The sources informed that the list of items likely to attract steeper duties is set to include appliances such as refrigerators and air conditioners too.
On 1 February 2021, India’s finance minister Nirmala Sitharaman will unveil the government’s annual Federal Budget for the 2021-22 financial year amid the shadow of a projected economic contraction of 7.7% for the current fiscal year.
As per sources, the proposals may still be tweaked further before they are finalised.
In the last few years, several policies and measures have been taken by the Modi-led government, which are believed to discriminate against foreign companies. However, according to the Centre, such taxes are essential to promote India as a destination for local manufacturing and to support domestic businesses.
Last year, India raised import taxes on a wide range of products such as footwear, furniture, toys, electrical and electronics items by up to 20%.