trade deficit: Government ups import duty on telecom gear to trim trade deficit

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NEW DELHI: The authorities on Thursday raised customs duty on eight parts and tools utilized by the Telecom sector because it sought to scale back the dependence on imported items in a sector with burgeoning demand, which might outstrip the worth of oil imports within the coming years.

This is the second spherical of duty improve in as many weeks to minimize down on what’s seen as “non-essential” imports and save treasured {dollars} at a time when the trade and the present account deficit are widening and piling stress on the rupee, which has plunged over 15% towards the US greenback, making it the worst performing Asian forex to date in 2018.

The improve in import tariff will affect costs of key tools similar to base stations, optical transport tools and Voice over Internet Protocol (VoIP) gear. The authorities has already raised the import duty on cellphones, which have been spared on this spherical, tax consultants stated.

“The increased import duty rates on some of these products would entail an additional burden on the Telecom industry, where these goods are imported,” stated Abhishek Jain, tax associate at consulting agency EY.

India’s Telecom tools imports had been estimated at shut to $22 billion over the past monetary 12 months, in accordance to knowledge compiled by the Telecom Regulatory Authority of India (Trai). During this era, oil imports had been pegged at $88 billion, and are anticipated to rise considerably this 12 months due to a spike in world costs, which proceed to hover above the $80-per-barrel mark.

The solely constructive is the elevated meeting of cellphones within the nation, with a number of world gamers similar to Samsung and Xiaomi establishing items right here, whereas different similar to Apple are but to agency up plans, regardless of being in talks for a number of years.

In the final spherical, the federal government had elevated import duty on air conditioners, washing machines, fridges, textiles and diamonds in an try to trim present account deficit, which is the distinction between exports and imports and different inflows similar to investments and remittances.

The measures had been, nonetheless, seen to be meagre as the worth of those imports had been estimated at just a little over $12 billion, with trade specialists fearing that the supply of shipments would transfer to nations similar to Vietnam and Korea with which India has free trade agreements.

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