FinMin panel for higher duties on non-essential imports

Business

oi-Sunil

By Sunil Fernandes

Published: Saturday, August 10, 2013, 10:15 [IST]

An inter-ministerial panel has suggested higher taxes for non-essential imports with a view to curbing inward shipments and containing the current account deficit (CAD).

The Committee has also suggested a list of non-essential items the import of which could be compressed, with a view to bridge the trade gap.

These suggestions form part of the recommendations made by the Committee set up by Finance Minister P Chidambaram under the chairmanship of Rajat Bhargava, Joint Secretary (Budget Division) to suggest steps to contain the rising CAD, which had touched a record high of 4.8 percent of GDP in the last fiscal.

The committee has already submitted its report to Chidambaram and according to sources some steps are likely to be announced soon.

"The panel has suggested higher taxes on those non- essential items which do not add to inflationary pressures," sources said.

Chidambaram had earlier said that the government would be looking at "some compression in non-oil and non-gold imports, especially of non-essential goods", citing the example of coal and electronic hardware.

For the April-June period this fiscal, exports were down by 1.41 percent at USD 72.45 billion over the same period last year. However, imports during the period were up by 5.99 percent at USD 122.6 billion.

Trade gap in the first quarter stood at over USD 50 billion.

India's exports during 2012-13 was at USD 300.3 billion, while imports aggregated USD 491.9 billion. Trade deficit stood at USD 191.6 billion during the period.

Current Account Deficit (CAD) occurs when total imports of goods, services and transfers are higher than exports, reflecting outgo of foreign exchange.

PTI