Govt weighing curbs on steel, aluminium, alcohol, furniture and gold imports
18 September 2018
The finance ministry is set to announce import curbs on certain goods as part of the measures to reduce the country’s import bill and with it the current account deficit as announced by the government late on Friday.
The list, which includes items like steel, aluminium, alcohol and furniture,
is inconclusive as the ministry is yet to decide on adding gold to the list of non-essential items, say reports.
Following a review of the state of the economy by a cabinet team headed by Prime Minister Narendra Modi, it was decided to impose curbs on import of some non-essential high-value goods as part of the measures to curb rising current account deficit and shore up the rupee that has fallen below 82 against the US dollar.
The government has the will, over the next few days, detail the list of goods on which there will be import curbs.
“A committee is working on the list, and it is likely to be out within this week,” a top Finance Ministry official said here on Monday. The list could include steel, aluminium, wooden and other furniture, dry fruits, fresh fruits and alcoholic beverages, and other items. The Ministry is still to decide if gold should figure in this basket.
The curbs envisaged could be in the form of higher duty, but within the norms of the World Trade Organisation (WTO).
One option is to impose a safeguard duty (which aims to protect the domestic industry from ‘aggressive’ imports) on some items.
However, the precise quantum of the savings that such import curbs will bring about is yet to be ascertained.
The government had on Friday announced a slew of measures to narrow the current account deficit (CAD) and boost the rupee. These included a relaxation of the mandatory hedging condition for infrastructure loans, a review/removal of the limits on foreign portfolio investors’ (FPI) corporate bond portfolio exposure to a single corporate group, waiver of the provision on withholding tax on Masala Bonds issued during the current fiscal; permitting manufacturing firms to avail of loans up to $50 million with a maturity of one year and curbs on the import of non-essential items.
With the rupee having fallen by over 12 per cent in just this calendar year, the country’s current account deficit, which has already reached 2.4 per cent of GDP during the first three months (April-June) of the current fiscal, is likely to rise further to 3 per cent this fiscal.