Govt may raise import duties on auto parts, electronics and electrical items

 As the government steps up its focus to boost local manufacturing and curb sub-standard, non-essential imports, we may see a rise in custom duties on several dozen products including certain electronics and electrical items and auto parts. But the hikes are likely to cover imports of a few billion dollars only or a tiny fraction of the country’s annual imports.

 “It’s not targetted to be a revenue-enhancing measure but the duty rationalisation is essential for the Atmanirbhar Bharat programme. The final list of products is ready and the Budget will make the announcement,” an said an official source.

He, however stressed that the move is not aimed at targeting imports in general and rejected the notion that the country was getting unduly protectionist. Rather the government will target only a few segments of imports where local substitution already exists in great numbers or is possible. In a few cases, it will correct inverted duty structures under which raw materials are taxed higher than the finished products.

Earlier this fiscal, industry executives had drawn a list of 1,173 items – ranging from auto parts, compressors for AC and refrigerators to select steel and aluminium products and electrical machinery for the government to zero in on products/sub-products on which the import duties can be hiked.

These items are mostly imported from China and can be substituted with local production without much hassles, it  has been said earlier. Imports of these 1,173 items from China were worth $12 billion in FY19. They made up for just 2.3 per cent of India’s total imports that year but 17 per cent of New Delhi’s purchases from Beijing.

While any duty hike won’t be country-specific, in keeping with the fair trade principles, it could hurt China the most as Beijing is the biggest supplier of such cheap and low-grade products to India.