GOVT HIKE IN IMPORT DUTY AND EXPERTS VIEW

GOVERNMENT MAKES HIKE IN NON ESSENTIAL IMPORT ITEMS

On account of the current account deficit(CAD) by the Indian government. Govt raised the import duty on the "non essential items" by Wednesday (27/09/2018). The items include washing machine, Air conditioner, Radial Tyres and more

Ministry of finance in statement said, "The central govt have taken tariff measures by way of increase in customs duty  to curb import of certain important. These changes will narrow down the CAD".

The new rates will effect from today night 27/09/2018 (Wednesday).

The last bill on account of these item listed bellow made 86,000 crores last fiscal(government revenue).

The import duty was doubled to 20% for the items like AC, Washing machine (less than 10 kg), Refrigerator.

THE CAUSES FOR THE INCREASE IN DUTY:

India’s current account deficit deteriorated to 1.9% of GDP in FY18 from 0.6% in the year before and is forecast to rise to around 2.8% in the current year. Given the uncertain global environment, emerging economies running high current account deficits have seen their currencies depreciate sharply amid interest rate increases by the US Federal Reserve, higher crude prices and an intensifying global trade war. The Indian rupee is down about 13% since January. 

EXPERTS VIEW ON IMPORT DUTY HIKE:

“The move will have a negative impact on air-conditioner manufactures as compressor costs would go up by 10 per cent,” said Kunal Sheth, analyst, Prabhudas Lilladher. “Companies will not be in a position to pass on the extra cost to the customer as they have already increased prices twice this year due to the rupee depreciation.” 

"As most of the product like refrigerator, washing machine, AC are mostly manufactured completly in India , it won't impact the product price", G Chokkalingam, Founder, Equinomics research and advisory.

KN dey, Managing director, United Financial consultant, "This will bring up more tax revenue for government, And also support the make in india".

CONCLUSION: 

The increase in price of crude oil and increase of import duty for non essential products and fall of INR against USD, Is expected to result in Inflation.