Planning to buy a refrigerator or an air conditioner for next summer?
Hold on, because these appliances may now cost more. So will washing machines, imported footwear and air travel.
To stabilise the falling rupee and check the current account deficit, the government has hiked the customs duty on 19 items. These hiked prices came into effect yesterday.
This step is aimed at controlling the import of non-essential goods. Once the price of these imported goods increase, it will, in turn, affect the demand and lower the rate of imports, helping increase the market for local manufacturers.
The finance ministry shared a press release which stated that the total import bill on account of shipment of these items into the country last fiscal year (2017-18) was Rs 86,000 crore.
Here’s a quick rundown of the imported goods that may now burn a hole in your pocket:
- Customs duty on aviation turbine fuel has been increased by 5 per cent. The price of jet fuel has been hiked by Rs 2,000 per kilolitre, which will make your air travel or flight tickets more expensive.
- Customs duty on imported air conditioners, washing machines and refrigerators has doubled to 20 per cent from the previous 10 per cent. Further, customs duty on compressors used in air-conditioners and refrigerators has been hiked to 10% from 7.5%.
- Import duty on audio speakers has been raised to 25 per cent from 20 per cent.
- Duty on foreign footwear has been increased by 5 per cent.
- Duty on radial car tyres has been raised to 15 per cent from the earlier 10 per cent.
- Customs duty on jewellery has been hiked from 15 per cent to 20 per cent. The definition of which is “articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal” and “articles of goldsmith or silversmith wares and parts thereof of precious metal or of metal clad with precious metal.”
- Customs duty on non-industrial cut and polished diamonds, semi-processed or half-cut or broken diamonds, lab-grown diamonds and cut and polished coloured gemstones has been increased to 7.5 per cent from 5 per cent.
According to a report in Economic Times, this increased duty may yield Rs 4,000 crore in revenue.
“The hike in import duty on the identified non-essential items is likely to have a modest impact on curtailing the size of the current account deficit in FY2019, which we currently estimate at around 2.8% of GDP,” Aditi Nayar, principal economist, ICRA Ltd told the publication.
Whether consumers still stick to imported goods despite the hike or turn to the domestic market remains to be seen.
(Edited by Shruti Singhal)