Centre plans higher levy on some goods to cut imports

Budget 2021 | Centre plans higher levy on some goods to cut imports

Refrigerator, washing machines, cloth dryers, aluminium and electrical goods are among products likely to see an increase in customs duty

Boosting local manufacturing is key for Prime Minister Narendra Modi’s government to create jobs lost because of measures to stem the pandemic. Credit: Bloomberg Photo

India is considering a proposal to raise levies on a range of imported goods, with a view to boosting local manufacturing in line with the government’s focus on self-reliance, people with knowledge of the matter said.

Refrigerator, washing machines, cloth dryers, aluminium and electrical goods are among products likely to see an increase in customs duty, the people said asking not to be identified citing rules. The move may be announced as part of the federal government’s annual budget to be presented on Feb. 1.

Boosting local manufacturing is key for Prime Minister Narendra Modi’s government to create jobs lost because of measures to stem the pandemic. While India’s current account -- the broadest measure of trade -- flipped to a rare surplus last year due to a slump in consumption, sustaining the trend will require India to substitute non-essential imports with home-made goods.

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Import duties on some raw materials used for making export goods may also be pared, the people said. Items such as copper cathodes and copper waste and scrap -- used in air-conditioning and electronics, besides coal tar pitch, and certain raw materials for making furniture may also see levies slashed, they said.

A call made to a finance ministry spokesman during business hours was not immediately answered.

Modi has made self-reliance central to his government’s plan to shake-off the economic fallout of the pandemic. Lockdowns to check the viru’s spread disrupted economic activity and pushed India -- which not long ago held the title of the world’s fastest-growing major economy -- toward the biggest annual contraction on record this year.