The Centre on Thursday increased customs duty on various types of telecom equipment, and imposed duty on printed circuit boards used to make such equipment, in an attempt to reduce the country’s current account deficit. Last month, the government had announced an increase in import duty on 19 items.
Telecom products including base stations, optical transport equipment and IP radios will attract customs duty of 20% instead of 10% from Friday, The Economic Times reported quoting a notification by the Central Board of Indirect Taxes and Customs. Several telecom products on which no duty was levied – such as populated, loaded or printed circuit board – will now attract 10% duty.
Two unidentified senior Finance Ministry officials told The Indian Express that the government could take additional measures to curb imports, and bonds could be issued to Non Residential Indians.
The latest increase in import duties come after the Sensex tanked over 759 points on Thursday, and the rupee continues to plumb new lows against the dollar. India’s balance of payments position has turned negative in the April-June quarter for the first time in six quarters.
India’s current account deficit widened to $15.8 billion (Rs 1.14 lakh crore) during the second quarter of 2018-’19 financial year – which is about 2.4% of its gross domestic product – from $14.9 billion (Rs 1.08 lakh crore) in the corresponding period last year. A current account deficit is the result of a country importing more than it exports.
On September 14, Prime Minister Narendra Modi held discussions with Finance Minister Arun Jaitley, Finance Secretary Hasmukh Adhia, Reserve Bank of India Governor Urjit Patel and other officials to consider measures to check the current account deficit. At this meeting a decision was taken to cut non-essential imports.