Govt hikes import duties; flying, white goods costlier

Air travel is set to get costlier as the Centre imposed a 5% customs duty on aviation turbine fuel and hiked import duty on 18 other goods in a bid to cut “non-essential imports” that widened the country’s current account deficit (CAD) to a five-year high besides impacting the currency.

At present, the Centre does not levy any customs duty on ATF. The other goods that became costlier are air conditioners, household refrigerators and washing machines weighing less than 10 kg. The basic customs duty on these items was raised to 20% from the current 10%, the government said in a statement.

Speakers, footwear, radial car tyres, diamonds, coloured gemstones, jewellery of precious metal, household plastic items, travel bags and office stationery also became costlier after the duty was hiked by 50%. The move will come into force from Wednesday-Thursday midnight.

“The Central government has taken tariff measures, by way of increase in the basic customs duty, to curb import of certain items. These changes aim at narrowing the current account deficit (CAD),” the finance ministry said.

It said the Centre spent Rs 86,000 crore on the import of these items in 2017-18.

The decision to impose customs duty on ATF comes at a time when the airlines are struggling with the problem of high fuel cost and low fares.

The Centre had earlier this month decided to cut all “non-essential” imports and take steps to increase exports after a dis-balance in trade impacted the rupee and widened CAD.

CAD is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.

The step comes at a time when the Reserve Bank of India has reported a dip in the foreign exchange reserves that has breached the $400 billion mark for the first time in the current financial year (2018-19).

The reserves had hit a historic high of $425 billion in April this year.

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