India plans to increase import tariffs by more than 50 items, including electronics, electrical products, chemicals and handicrafts, with a target of approximately $ 56 billion (approximately Rs. 3.99.4 billion rupees) in imports from China and other places, officials and industry sources said.
Finance Minister Nirmala Sitharaman could make the announcement when she presents her annual budget for 2020-21 on February 1, along with other stimulus measures to revive economic growth, said one of the government officials.
Higher customs tariffs are likely to affect products such as mobile phone chargers, industrial chemicals, lamps, wooden furniture, candles, jewelry and handicraft items, two government sources with direct knowledge of the matter said.
The move could affect smartphone manufacturers that still import chargers or other components, such as vibrating motors and doorbells, along with retailers such as the giant IKEA that is in the process of expanding its presence in India.
IKEA had previously pointed out higher Indian tariffs as a challenge.
The government identified the items and decided to increase import tariffs by 5% -10% as recommended by a panel of officials from the Ministry of Commerce and Finance, among others, said the second government official.
"Our goal is to curb imports of non-essential items," the official said, adding that an increase in import tariffs would provide a level playing field for local manufacturers affected by cheap imports from China, the Association of Southeast Nations Asian (ASEAN) and other countries that enjoy trade agreements with India.
The sources asked not to be identified since the discussions were private.
A spokesman for the Ministry of Finance and a spokeswoman for the Ministry of Commerce declined to comment.
Since taking office in 2014, Prime Minister Narendra Modi has imposed several import restrictions while allowing greater foreign investment in manufacturing, defense and other sectors.
The ruling Bharatiya Janata Party (BJP) of Modi has also asked the government to increase tariffs on non-essential items to boost local manufacturing.
"We expect the budget to address the issue of … cheap imports under free trade agreements," Gopal Krishan Agarwal, head of the BJP Economic Affairs Cell, told Reuters.
A committee of trade ministry officials, in consultation with local industries, had initially planned to target more than 130 items representing approximately $ 100 billion (approximately Rs. 7.13.2 billion rupees) in imports, but since then it has removed the list, said the first official. .
Import quality standards
The government is considering separately imposing "quality standards" on imports, as less than 10% of India's tariff lines are regulated by safety, health and environmental standards, said an industry official, who participates in pre-budget consultations.
Prior to the budget, the Ministry of Commerce has also asked the Ministry of Finance to consider a Border Adjustment Tax (BAT) on imported goods to level the playing field for national players who also have to pay local taxes as import duties. electricity and fuel levies, the second government official said.
The official added that this could be imposed in addition to any tariff that further increases the costs of imported goods.
Last July, the government increased the import tax of more than 75 items, including gold pieces and automobiles, in its post-election budget.
Imports of goods from India, which had been growing faster than exports in recent years, fell 8.90 percent during the period from April to December from the levels of the previous year, compared to a decrease of approximately two per percent in exports.
This has helped the Modi administration reduce its trade deficit that stood at $ 118 billion during April-December, compared to $ 148 billion the previous year.
The United States wants India to buy at least another $ 5-6 billion in US agricultural products if New Delhi wants to win the restitution of a key US trade concession and seal a broader pact, four sources familiar with the talks told Reuters .
The president of the United States, Donald Trump, cited trade barriers last year when he removed India from his Generalized System of Preferences program that allowed zero export tariffs of $ 5.6 billion to the United States. In retaliation, India imposed higher tariffs on more than two dozen US products.
© Thomson Reuters 2020
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