Govt hikes import duty on select communication items to up to 20% to check widening CAD

New Delhi: The government Thursday hiked the import duty on certain communication items, including base stations, to up to 20 percent as part of efforts to check a widening current account deficit by curbing imports. The increased duties would be effective from 12 October, the Central Board of Excise and Customs (CBIC) said in a notification. This is the second round of import duty hike announced by the government in a little over a fortnight. The import duty has also been hiked on certain inputs used in the communication industry like Printer Circuit Board Assembly (PCBA). Import duty on populated, loaded or stuffed printed circuit boards of all goods other than mobile phones, base station and optical transport equipments has been raised to 10 percent. Duty has also been raised to 20 percent from 10 percent for base stations and for machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, voice frequency telegraphy, digital loop carrier systems and multiplexers, it said. [caption id=“attachment_4495585” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] The CBIC said the Central government was satisfied that the import duty leviable on goods falling under Chapter 85 of the First Schedule to the Customs Tariff Act, 1975, should be increased and that circumstances exist which render it necessary to take immediate action. Chapter 85 deals with electrical machinery and equipment, sound recorders, television image recorders and their parts. The government had on 26 September doubled the import duty on 19 items, including air conditioners, household refrigerators and washing machines (less than 10 kg), to 20 percent. Following a meeting chaired by Prime Minister Narendra Modi, the government had on 14 September announced that it would impose curbs on import of non-essential items to contain the widening CAD and check the rupee’s fall. Earlier Thursday, a Finance Ministry official had said more steps will be taken to check CAD and hoped that the rupee would appreciate. “Rupee, Balance of Payments, CAD are the main worries, we have a strategy in place to tackle the situation. We will take action at an opportune time on these issues,” the official said. The CAD widened to 2.4 percent of the GDP in the first quarter of 2018-19. The rupee touched a historic low of 74.50 to a dollar in the intra-day trade Thursday, before closing at 74.12. The domestic currency has depreciated by over 13 percent since the beginning of 2018. Large trade deficit and rupee’s decline against the US dollar are putting pressure on the CAD, and these steps are likely to have a positive impact on the external sector. Earlier on 26 September, the basic customs duty on compressors, speakers and footwear was raised to 10 percent, 15 percent and 25 percent, respectively. The duty on radial car tyres was raised from 10 percent to 15 percent while for cut and polished diamonds, semi-processed diamonds, lab-grown diamonds, coloured gemstones the import duty was hiked from 5 percent to 7.5 percent.