GOVT Increases Customs Duties On 19 Items To Tackle Current Account Deficit (CAD)

THE government has hiked import duties on 19 ‘non-essential’ items to tackle widening Current Account Deficit and shore up Falling Rupee evoking mixed impact on the stock markets on Thursday. Most consumer goods makers stocks, like Whirlpool (-1.35%), Symphony (-1.20%) and Blue Star (-1.39%) were trading with losses, while tyre makers shares posted big gains in early morning trade. JK Tyre posted its biggest intra-day percentage gain in two years. Titan company shares jumped nearly 4% as the government did not hike the import duty on gold from the existing 10%. The company is also unlikely to be affected by the customs duty hike on categories of diamond such as semi-processed, half cut or broken, and cut and polished coloured gemstone to 7.5%, from 5% earlier. Luggage maker VIP Industries shares were down nearly 3% during morning deals. The government Wednesday hiked customs duties on as many as 19 items, including jet fuel, ACs and refrigerators, effective midnight as it aims to curb imports of non-essential goods. Total import bill on account of shipment of these items into the country last fiscal was Rs 86,000 crore, the Finance Ministry said in a statement. The other items include washing machines, speakers, radial car tyres, jewellery items, kitchen and tableware, certain plastic goods, and suitcases.”The central government has taken tariff measures, by way of increase in the basic customs duty, to curb import of certain imported items. These changes aim at narrowing the current account deficit (CAD) … In all the customs duty has been increased on 19 items,” the ministry said. The import duty was doubled to 20 per cent on ACs, refrigerators and washing machines (less than 10kg). These changes in the rates of basic customs duty will be effective from midnight of September 26-27. Curbing non-essential imports was part of the five-pronged steps announced by the government to check widening current account deficit and capital outflows. The CAD, the difference between inflow and outflow of foreign exchange, widened to 2.4 per cent of GDP in the April-June quarter. In a major move to narrow the country’s current account deficit (CAD) and stem the fall of the rupee, the government on Wednesday hiked import duties on 19 products: air conditioners, household refrigerators, washing machines, compressors for air conditioners and refrigerators, speakers, footwear, radial car tyres, various gems and jewellery products, plastic goods, luggage carriers like suitcases etc, and ATF. However, no import curbs have been imposed on gold and steel. The new import duties will go into effect from September 27, an official statement said.(With inputs  from The Financial Express).