Minimum import price among options to reduce non-essential goods

NEW DELHI: India could consider imposing minimum import prices or safeguard duties on certain products, as it tries to reduce non-essential imports and reduce the deficit current account to check the depreciation of the rupee.

These measures are perceived to be more effective than simply increasing duties, which leads to the movement of goods to countries with which India has concluded free trade agreements or totally prohibits the World Trade Organization (WTO). . The restriction of the entry of certain goods into certain ports and the increase of selective duties could also be envisaged.

Among the commodities that may be subject to such restrictions are certain non-ferrous metals such as copper and aluminum, precious metals, including gold and telecommunication equipment, in addition to certain categories of durable consumer goods.

"There are different options on the table … they are under review," said a government official.

Part of the government is in favor of such measures, which also cover FTAs, as opposed to increases in domestic tariffs. There are cases where imports have taken the FTA path after domestic tariffs have been raised.

Finance Minister Arun Jaitley said Friday after a crucial meeting of the foreign sector by Prime Minister Narendra Modi, the government would take measures to limit imports.

"The list of non-essential items will be decided in consultation with the relevant ministries to ensure that the measures we are taking are consistent with our obligations under the World Trade Organization's multilateral trade agreement," Jaitley said. Friday.

India's current account deficit deteriorated from 0.6 percent in the previous year to 1.9 percent of GDP in FY18 and is expected to be around 2.8 percent for the current year . The trade deficit reached $ 80.4 billion in the first five months of the current fiscal year, compared to $ 67.3 billion for the same period last year.

The government imposed tariffs on smartphones in July 2017 and then raised it in the budget. Customs duties have been levied on a host of goods such as inputs used in mobile phones and other equipment, watches and fruit juices.

Indian industry also complained of the dumping of iron, steel, copper and aluminum, and the imposition of minimum prices on imports will slow the demand. Imports of iron and steel increased by 25% during fiscal year 18, copper by 33% and aluminum by 30%.

India has imported cell phones worth $ 3.5 billion during fiscal year 18. Restricting imports to a port can slow shipments.

Tax experts say that a longer-term solution lies in the revision of the FTAs. "The increase in import tariffs by sector or specific products in recent months has had an insignificant impact on the volume of imports because many of them are imported under FTAs," he said. said Rahul Shukla, executive director of PwC.

"As a result, the government may wish to consider concessions made under free trade agreements at the same time, and consultative or corrective measures under these agreements, while continuing to focus on initiatives in India. .