India hits back at US, hikes import duty on 29 products

India hits back at US, hikes import duty on 29 products

Steel products, Reuters file photo

India has increased customs duty on 29 products, including pulses and iron and steel products, imported from the US as a retaliatory action against the tariff hike by Washington.

The duty hike would come into effect immediately for 28 products, while for artemia, a kind of shrimp, the rate hike would be effective from August 4, the finance ministry said in a notification.

With the United States adopting protectionist policies and hiking import duties, a trade war like situation has emerged. The European Union has decided to levy higher import duties on a variety of US products and a similar action is being contemplated by China.

As per the finance ministry notification, the import duty on chickpeas, Bengal gram (chana) and masur dal has been increased to 70 percent from 30 percent earlier, while that on lentils has been hiked to 40 percent from 30 percent.

Shelled almonds imported from the US will now attract import duty at Rs 120/kg as against Rs 100/kg earlier. Almonds in shell will attract import duty at the rate of Rs 42/kg as against Rs 35/kg.

Import duty on walnut in shell will attract customs duty at the rate of 120 percent as against 30 percent earlier. While apples will attract import duty of 75 percent as against 50 percent earlier.

The duty on boric acid has been hiked to 17.50 percent, while the same on phosphoric acid has been raised to 20 percent from 10 percent each earlier.

Import duty on diagnostic reagents has been doubled to 20 percent, while binders for foundry moulds has been hiked to 17.5 percent.

Flat rolled products on iron has been raised to 27.50 percent from 15 percent earlier, while certain flat rolled products on stainless steel would now attract 22.50 percent duty as against 15 percent earlier.

Duty on artemia, a kind of shrimp, has been raised to 30 percent with effect from August 4.

Last week, India had submitted to the WTO a list of 30 items on which it proposed to raise customs duty by up to 50 percent.

In the notification, there is no mention of duty hike on motorcycle with engine capacity of over 800cc.

As per the list India submitted to the WTO, it had proposed to hike customs duty on specified motorcycles, which primarily include Harley Davidson and Triumph, to 50 percent.

For automobiles and earth moving equipment, SIM socket/other mechanical items (metal) for use in the manufacture of cellular mobile phones, the duty has been hiked to 25 percent from 15 percent earlier.

Deloitte India Partner M S Mani said that on several products such as pulses the increase is very steep (30 percent to 70 percent), while for iron and steel products, the increase is at least 50 percent of the existing rate (from 15 to upwards of 22.5 percent).

"The increase in the customs duties on goods originating from the USA was expected, but the magnitude of the increases would have been unexpected. These increases would make the domestic products cheaper compared to imports and lead to domestic manufacturing/demand pick-ups as a corollary," Mani said.

The decision to hike duties is in retaliation to the unilateral increase in tariff by the US on certain steel and aluminium products earlier this year which had tariff implication of USD 241 million on India.

The duty hike by India would have equivalent tariff implications for the US.

On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminium items, a move that has sparked fears of a global trade war.

India has said the duty imposed by the US has affected steel exports by USD 198.6 million and aluminium shipments by USD 42.4 million.

India has also dragged the US to the World Trade Organisation's (WTO) dispute settlement mechanism over the imposition of import duties on steel and aluminium.

India exports steel and aluminium products worth about USD 1.5 billion to the US every year.

India's exports to the US in 2016-17 stood at USD 42.21 billion, while imports were USD 22.3 billion.