A considerable hike of 5% to 10% on import duty on more than 50 items including smartphones, electronic components and appliances can be announced for this year’s budget.
As per sources, this step to raise import duties is a part of PM Modi’s self-reliant ‘Aatmanirbhar’ India campaign which intends at promoting and boosting domestic manufacturing and production. By this move, the government is trying to target extra revenue of about 200 million to 210 million rupees ($2.7 billion to $2.8 billion) as it looks at pick-up the revenue amid the pandemic-driven slowdown that has beaten the economy.
The duty hikes can affect furniture and electric vehicles, likely to spoil the international furniture manufacturer like Ikea and electric vehicle company Tesla, which are planning to launch its car in India in 2021. However, the sources did not stipulate on how much raise will be put on the furniture and electric vehicles. Before, both Ikea and Tesla executives have shown concerns about the high duty structure their products already face in India.
The other items that will possibly get higher duties include appliances such as refrigerators and air conditioners.
India's finance minister Nirmala Sitharaman will unveil the government's yearly Union budget for the 2021-22 financial year, on February 1, which begins April 1. The current fiscal year’s economy has seen a contraction of 7.7%.
All these proposals may still undergo further changes before they are finalised.
In recent years, India has taken a series of steps that industry executives say discriminate against foreign companies.
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However, Government officials believe that such taxes are essential for India’s development to support local manufacturing and domestic businesses. "This is part of revenue-raising and Atmanirbhar Bharat plan," said one of the government sources.
In 2020, India increased import taxes on a broad range of products such as footwear, furniture, toys, electrical and electronics items by up to 20%.