Budget 2021: Smartphones, TV, Cars Will Be Expensive As Import Duty Can Be Hiked BY 10%
As part of the upcoming budget, the Indian government is planning to hike the import duties by 5%-10% on more than 50 items mainly including smartphones, electronic components and appliances, according to the sources.
Why Would This Happen?
This move of increasing import duties is inspired by Prime Minister Narendra Modi’s self-reliant India campaign, as per the information provided by the anonymous sources.
Basically, this campaign aims to promote and support domestic manufacturing.
The government is expecting to gain an additional revenue of about Rs 20,000 crore to Rs 21,000 crore ($2.7 billion to $2.8 billion) from this move.
How Does This Move Affect?
These changes in the duty hikes could impact furniture and electric vehicles, potentially hurting the likes of Swedish furniture maker Ikea and Tesla according to sources.
Where Tesla is planning to launch its cars in India in the coming months.
The officials, however, did not specify how much of a hike was planned on furniture and electric vehicles.
Prior to this, both Ikea and Tesla executives have expressed their concerns about the steep duty structure their products are already facing in India.
In addition to that the list of items that are likely to attract steeper duties also includes appliances such as refrigerators and air conditioners too, said the sources.
Annual Federal Budget 2021-22
Regarding the queries, the finance ministry could not be reached and did not reply to an email seeking comments.
For the 2021-22 financial year, India’s finance minister will be unveiling the government’s annual federal budget on February 1 and will be effective from April 1.
This latest proposal about the hike of import duties may still be tweaked further before they are finalized according to the sources.
On February 1, the Finance Minister of India, Nirmala Sitharaman will be unveiling the budget amid the shadow of a projected economic contraction of 7.7% for the current fiscal year.
Discrimination Against Foreign Companies
According to the Industry experts, in recent times, India has taken a series of measures that discriminate against foreign companies.
But on the other hand, Government officials assure that such taxes are essential to promote India as a destination for local manufacturing and to support domestic businesses.
Further, the government sources said, “this is part of revenue-raising and Atmanirbhar Bharat (self-reliant India) plan,”.
Last year also, the government raised import taxes on a wide range of products including footwear, furniture, toys, electrical and electronics items by up to 20% last year.