New Delhi: The Union government is planning to hike import duties and regulate the import of "non-essential items" so as reduce the widening gap of the trade deficit. The gap is being stretched due to a slowdown in exports, The Indian Express reported.
The government will impose a hike on select goods import, restricting it to those items that have enough manufacturing capacity in the country but not those included in the categories under the same Harmonized System of Nomenclature (HSN) code.
An official explained, citing the bicycle industry as an example, that there are different types of materials needed there, including steel, alloy, and ceramics, but all bicycle hubs come under the same HSN code.
But the government is planning to impose high import duty on steel due to its excess domestic capacity. Therefore, the government has to find ways to separate the materials of bicycle hubs from the HSN category so that import duty affects them individually.
Duty hikes were last imposed in the Budget 2022-23 when the same was introduced on umbrellas, headphones, earphones, loudspeakers, smart meters, and imitation jewellery. Most of them were imported from China.
The last five years saw import duty rise on many occasions on items like almonds, apples etc. Mostly, mobile phone parts and solar panels saw most regular hikes, which were meant to back the domestic industry.
In the economy, high imports were viewed as an issue since it could negatively impact the widening trade gap, particularly when exports remain weak as global demand is slowdown.
Merchandise export has reversed a small amount of negative trend, posting a marginal growth of 0.6 per cent year-on-year growth in November, the trend is still weak.