The government has announced a hike in import duty for about 19 non-essential consumer items including air conditioners, washing machines, gemstones, artificial diamonds, etc. This move is mainly aimed at narrowing the current account deficit (CAD) for the upcoming fiscal year. According to the statement released by the finance ministry, the revised rates for these items came into effect from September 27 onwards.
Under this revision, the import duty for washing machines, air conditioners, and refrigerators has been increased from 10% to 20%. The rate has been hiked from 7.5% to 10% for compressors used in refrigerators and air conditioners. A new addition to the list is aviation turbine fuel. The government has introduced a customs duty of 5% for this item.
For imported footwear, excise duty has been hiked to 25% from the existing rate of 20%. The import duty for radial tyres has been increased to 15% from the current rate of 10%. For jewellery items like artificial diamonds and gemstones, the import duty was hiked to 7.5% from 5%. Some of the other items included in this list include miscellaneous plastic items, luxury bath products, silverware, precious metals, kitchenware, etc.
Certain products like gold, coal, and steel are not included in this list as they are likely to negatively affect the country’s economy. For instance, any hike in the import duties of these items is expected to cause higher inflation. In the case of gold, this may also lead to an increase in illegal activities like smuggling.
Most of the items included in the list are non-essential items and contribute a relatively low amount to India’s imports. It was estimated that the total import value of these 19 items during the fiscal year 2017-18 was around Rs.86,000 crore. By increasing the excise duties of these items, the government expects to lower the import demand for these items and boost domestic growth.