Centre to put curbs on imports of some items to arrest rupee’s fall: Report
In a bid to contain the widening current account deficit (CAD), the government may target some “non-essential imports” through hikes in duties. This will be done if the fall in the value of the rupee continues, a report by Financial Express (FE) stated.
Amid the continuous tightening of monetary policy by the US Federal Reserve (Fed), the CAD may prove to be a double whammy for the Indian currency, the report added.
The authorities have already started to track the imports of select products, including electronics. However, a final decision is still to be made. Electronics are the second highest imported commodity in India after oil.
Also Read: What next for central banks?
“The government is keeping a close eye on the import situation. It (targetting non-essential imports) may happen if the trade deficit continues to remain at very high levels in the coming months and exerts further pressure on the rupee,” the FE report quoted an official as saying.
India’s CAD was recorded at 2.8 per cent of the Gross Domestic Product (GDP) in the first quarter of the current financial year. This was mainly driven by a high merchandise deficit of $68.6 billion.
The import duty on gold was hiked earlier from 10.75 per cent to 15 per cent, leaving very less scope for further hikes.
However, the experts also said that targeting imports may not give the intended results always.
Comments are closed.