Amid falling rupee, global market sell-offs and a plunging market, government has hiked import duty up to 20 percent on certain communication items to provide a boost to the domestic industry. The new rates come into effect from October 12.
Barring mobile phones, import duty on “populated, loaded or stuffed printed circuit boards” of eight goods has been raised to 10 per cent.
The items on which import duty has been raised from 10 per cent to 20 per cent include base stations and machines for reception, conversion and transmission or regeneration of voice, images or other data including switching and routing apparatus other than modems, VoIP equipment, optical transport equipment, combination of one or more of packet optical transport product or switch, optical transport network products and IP radios, packet transport node products, multi-protocol label switching transport profile products beside multiple input/multiple output and long term-evolution products.
Govt addresses CAD, hikes import duty on telecom items by 20%https://t.co/bvg7veDEBG
— IIFLMarkets (@IIFLMarkets) October 12, 2018
This is the second hike in import duty of non-essential goods by the government. Previously the Centre increased import duty on 19 goods including air conditioners and household refrigerators.
The aim of the government is to arrest the widening Current Account Deficit (CAD). It will also help in checking the outflow of foreign exchange from the country. The main focus of the government is on CAD, balance of payments gap and the rupee.
For months now, the rupee and CAD are in a negative domain. This can be attributed to the rising crude oil prices. An official, offering a positive outlook, said, “Oil prices are now coming down, so that is a reason for rupee to appreciate. It’s possible that some people might have taken positions in rupee, with some kind of different outlook, but now I think it is time for them to reconsider also. They may lose money if they…but we believe that rupee should only appreciate from this level. At least, it should start appreciating. That’s our estimate,”
A senior official, associating the fall in market to global factors, said, “What happened in US yesterday had a ripple effect here today. IMF downgraded global growth rate, US growth rate for next year, both these had impact on markets…(But) India’s (growth) is impressive and stable. They have downgraded not only global GDP growth rate but they have also downgraded two specific countries, which will have a competitive effect vis-a-vis India, that is, US and China.”