The prime minister’s office is planning a meeting in New Delhi this week to review measures including curbs to curtail the trade gap.
New Delhi: India is considering a proposal to increase import duties on a raft of products ranging from plastic to steel as it seeks to curb a ballooning current-account deficit and prop up a sagging rupee, people familiar with the matter said.
Prime Minister Narendra Modi’s administration is planning to increase tariff on items including furniture, chemicals and mobile phone components, the people said, asking not to be named as the information is not public. The prime minister’s office is planning a meeting in New Delhi as early as this week to review measures including curbs to curtail the trade gap, they said. Finance ministry spokesman D.S. Malik declined to comment.
The South Asian nation is trying to curb overseas shipments to prevent a further widening of the current-account deficit and stem the fall of the rupee. The currency, which has been plummeting for six straight months in the longest stretch since 2002, is seen hitting 75 per dollar by year-end, according to median of 10 analysts surveyed by Bloomberg.
The trade deficit represented 2.4 percent of gross domestic product, more than the 1.9 percent seen in the March quarter, according to latest data from the RBI. Earlier measures such as raising import tariffs on 19 products and easing some overseas borrowing norms have as yet failed to revive the confidence of investors. – Bloomberg
In my view, increasing duties is a wrong thing to do. The IT sector crows when visa restrictions are put in and say that this is against free trade and that the world is a global village and competition will win. Extending that argument, what will the countries which are exporting these components say? They will too raise duties on anything that the country exports. The need of the hour is to reduce the consumption of oil by de-congesting the cities by developing alternate cities, increased use of public transport, efficient use of roads so that the traffic jams are kept to minimum. Any other measures are just a scarecrow of strong measures and will not achieve anything.