Centre planning to hike import duty on non-essential goods: Report

New Delhi, Dec 19 (KNN) The central government is planning to hike the import duty on non-essential goods to tackle the widening trade deficit, according to an Indian Express (IE) report.

“We are looking at non-essential imports for which there is enough manufacturing capacity. It is to identify non-essential items, where there is sufficient production capacity and allow for higher import substitution,” a senior government official told The Indian Express.

As per the report, the economic ministries in the Central government are in the process of carrying out an exercise to select a list of items on a granular basis to ensure that the proposed duty hikes are restricted to those items for which there is enough manufacturing capacity in the country, but not for other items in the categories that come under the same Harmonized System of Nomenclature (HSN) code.

In the current form, HSN codes are seen as subsuming a broad sweep of items, even at the six or eight-digit classification levels. For instance, there are different types of materials for bicycle hubs including steel, alloy, ceramics but all bicycle hubs come under the same HSN code.

But with the government considering a higher import duty only for steel due to excess capacity domestically, it has to think of ways to separate other materials of bicycle hubs fr0m the HSN category to ensure the higher import duty doesn’t affect them, the official explained.

To solve the problem of widening trade deficit, the centre has to either push exports or disincentives imports. Due to a poor outlook on global growth means India’s exports will suffer just like most other countries. The other way is to hike duties on imports, particularly those that are not critical and are produced in India. This will help keep the deficit down.

The last set of duty hikes across a range of product categories happened in Budget 2022-23. Higher custom duties on items of daily use such as umbrellas, headphones, earphones, loudspeakers, smart meters, and imitation jewellery were introduced. Most of these products were being imported fr0m China, either as complete units or as knocked down units to be assembled in factories in India.

Over the last five years, import duty hikes have been made on several occasions such as on almonds, apples, and others. Mobile phone parts and solar panels have seen the most regular hikes, in large part to protect and promote the domestic industry.  (KNN Bureau)