Electronic items may attract import duty

Electronic items may attract import duty

After raising import duty on gold, a correction in duty structure of electronic products may be on the government’s radar as their imports have also largely contributed to rising current account deficit.

A consistent slow down in domestic manufacturing sector has also prompted the government to give a rethink on imposition of customs duty on electronic and other goods, cheap import of which are flooding Indian markets.

Currently, India does not levy import duties on several electronic goods, being a signatory of the Information Technology Agreement under the World Trade Organisation. So, if the import duty has to be raised, it has to be on such goods which are not covered under the agreement.

“These are mainly consumer electronics, which can attract some duty in the budget for 2013,” a senior government official said, without being specific on the items that can attract customs duty in the budget this year. According to estimates, India’s electronic goods import bill is likely to cross Rs.17 lakh crore by 2020, exceeding that of crude oil.

“It is a huge dent on domestic manufacturing, which has consistently shown a declining trend. A proposal to impose some duty on such imports is under consideration but still not reached the final stage,” a finance ministry official said.

The government recently proposed a string of initiatives to boost domestic manufacturing under the National Policy on Electronics that include development of electronic manufacturing clusters, a fund to promote research on electronic development and preferential access to locally-manufactured products.

The latest HSBC PMI data shows that the growth in India’s manufacturing slowed to a three-month low in January, as new export orders lost momentum. A slowdown in India’s manufacturing poses a risk to the already flagging economy.

The most recent official data showed that India’s industrial output grew only in three months in the current fiscal till date. In November, it unexpectedly shrank 0.1 per cent from a year earlier as exports fell for eight months in a row.

Experts say, raising of import duty on electronic items is needed not only to give boost to the domestic manufacturing, but also to stem the rising current account deficit.

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