Modi government will give a big blow to China in the budget! Custom duty may increase on ‘non-essential’ items

Indian Union Budget 2021-22: In the budget for the next financial year 2021-22, custom duty can be increased on many products including some electronics and electrical goods and auto parts. This announcement in the budget can be made to promote manufacturing at the local level and to reduce the import of non-essential items below the standard level. However, this increase may affect only a small portion of total imports, affecting imports of about a few billion dollars. India’s total imports were $ 475 billion (Rs 34.73 lakh crore) in FY 2020-21.

An official source told Financial Express that the list of products has been prepared, which will be announced in the budget regarding the custom duty. According to the source, the aim of the government’s move is to promote ‘Self-reliant India’ program instead of increasing revenue. On February 1, the budget will be presented by Finance Minister Nirmala Sitharaman.

Duty will be increased on those whose options are available

According to the source, the decision to increase custom duty does not mean reducing imports or adopting protectionist policies. The government will make changes only for those products whose strong alternative already exists or is likely to happen in India. In some cases, it will correct many anomalies regarding duty where raw materials are being taxed more than the finished goods. According to industry sources, the duty can be increased by about 100 tariff lines.

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China’s 17% share in 1173 goods imports

In the beginning of the current financial year, industry executives had prepared a list of 1173 items, including compressors, steel and aluminium products and electronic machinery for auto ports, ACs and refrigerators, on which the government could raise import duties. Most of these goods are imported from China and their options can be prepared in India without any difficulty. All these 1173 items were imported from China in FY 2019 for $ 1200 million (Rs 87.8 thousand crores). Their share in India’s total imports is just 2.3 percent. However, if we talk about imports from China only, then the share of these 1173 goods was 17 percent in FY 2019.

Duty was increased on some goods in the last budget

The decision of the central government to increase the duty in the budget will not be taken by targeting a particular country, but it will be the most affected China. The biggest reason for this is that most of the cheap and low-quality products in India come from China. Before the Budget was presented for the fiscal year 2021, the Ministry of Commerce and Industry had suggested that custom duty should be increased on 300 items including footwear, furniture, TV parts, chemicals and toys. The ministry called them non-essential imports. Duty was increased on several dozen of these items in the budget, but such a decision was not taken for all goods.

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