Govt. may raise import duties by 5-10%

Budget likely to raise levy on more than 50 items including smartphones, electronic components

India is considering raising import duties by 5%-10% on more than 50 items including smartphones, electronic components and appliances in the upcoming budget, three government sources privy to the discussions told Reuters on Monday.

The move to increase import duties is part of Prime Minister Narendra Modi’s self-reliant India campaign that aims to promote and support domestic manufacturing, said the sources, who asked not to be named as the discussions are not public.

Additional revenue

One of the sources said the government was seeking to target additional revenue of about ₹200 billion to ₹210 billion, as it looks to shore up revenue amid the COVID-19 pandemic-driven slowdown that has stung the economy.

Ikea, Tesla

Two of the government sources also said the duty increases could impact furniture and electric vehicles, potentially hurting the likes of Swedish furniture maker Ikea and Tesla, which is planning to launch its cars in India this year.

The officials, however, did not specify how much of an increase was planned on furniture and electric vehicles.

Both Ikea and Tesla executives have previously expressed concerns about the steep duty structure their products already face in India.

Refrigerators, ACs

The list of items likely to attract steeper duties is set to include appliances such as refrigerators and air conditioners too, three of the sources said.

India’s finance minister will on Feb. 1 unveil the central government’s annual budget for the 2021-22 financial year, which begins on April 1.

The sources said the proposals may still be tweaked further before they are finalised.

Finance Minister Nirmala Sitharaman will unveil the budget on Feb. 1 in the shadow of a projected economic contraction of 7.7% for the current fiscal year.

Self-reliance push

India has in recent years taken a series of measures that industry executives say discriminate against foreign companies. Government officials say such taxes are essential to promote India as a destination for local manufacturing and to support domestic businesses.

“This is part of revenue raising and Atmanirbhar Bharat (self-reliant India) plan,” said one of the government sources.

Last year, India raised duties on a range of products such as footwear, furniture, toys, electrical and electronics items by up to 20%.

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