Import Duty Current Affairs
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Government has doubled import duties on 328 textile products to 20% from existing rate of 10% under Section 159 of the Customs Act, 1962. Earlier in July 2018, Government had doubled import duty on over 50 textile products — including jackets, suits and carpets to 20%.
The increase in duties will give edge to domestic manufacturers as imported products are currently cheaper. It will curb soaring imports from China and focus more on local value addition in labour-intensive sector. This move will also help to promote ‘Make in India’ as imports of these goods had surged drastically in last one year especially post GST. It will increase in manufacturing activity in various segments of the entire value chain of textile sector, which will help to create jobs in sector, which employs about 10.5 crore people.
The move comes amid mounting concerns that trade war between world’s biggest economies United States and China will further aggravate dumping of cheaper products from China to Indian markets. As such, India’s textile imports jumped by 16% to record $7 billion in last fiscal, with China accounting for over 40% of purchases. Moreover, 28% hike in cotton prices by Government recently to ensure at least 50% premium to farmers over costs is expected to raise basic raw material costs for domestic manufacturers and could hurt our export competitiveness across value chains in the textile and garment sector.
Union Finance Ministry has further extended deadline on imposing import duty hike on 29 products, imported from United States (US) by 45 days till September 18, 2018 from earlier August 4, 2018. This decision for extension of retaliatory measures for another 45 days was taken based on suggestion of Union Commerce Ministry. It also comes after some positive expectations from ongoing talks between two countries as they are wrapping up negotiations on mutually-acceptable trade package for boosting India-US trade through greater market access.
The duty hike move 29 products announced by India in June 2018 was tit for tat retaliatory measure to March 2018 decision of US President Donald Trump to impose heavy tariffs on imported steel and aluminium items. The additional duties imposed by India were aimed at helping government earn additional $241 million, equivalent to amount of iron and steel trade affected by US measures. The 29 products included agricultural products such as almonds, apples, chickpeas, lentils, and walnuts, and industrial inputs such as boric acid, phosphoric acid, diagnostic reagent, flat rolled products of iron, certain flat rolled products of stainless steel. Prior to issuing duty hike notification, India has also had dragged US to World Trade Organization’s (WTO) dispute settlement mechanism over imposition of import duties on steel and aluminium.