Budget may raise duties by 5-10% to aid local mfg

Import of appliances, furniture, EV parts to get costlier

The government is considering hiking import duties by 5-10 per cent on more than 50 items, including smartphones, electronic components and appliances in the upcoming budget, three government sources privy to the discussions told Reuters on Monday.

The move to increase import duties is part of Prime Minister Narendra Modi's self-reliant India campaign that aims to promote and support domestic manufacturing, said the sources, who asked not to be named as the discussions are not public.

One of the sources said

the government was seeking to target additional revenue of about Rs 20,000 crore- 21,000 crore from the moves, as it looks to shore up revenue amidst the pandemic-driven slowdown .

Two of the government sources also said the duty hikes could impact furniture and electric vehicles, potentially hurting the likes of Swedish furniture maker Ikea and Tesla,

which is planning to launch its cars in India this year. Both Ikea and Tesla executives have previously expressed concerns about the steep duty structure their products already face in India.

The list of items likely to attract steeper duties is set to include appliances such as refrigerators and airconditioners too, three of the sources said.

The sources said the proposals may still be tweaked further before they are finalised.

India has in recent years taken a series of measures that industry executives say discriminate against foreign companies. Government officials say such taxes are essential to promote India as a destination for local manufacturing and to support domestic businesses.

"This is part of revenue raising and Atmanirbhar Bharat plan," said one of the government sources.

Last year, India raised import taxes on a wide range of products such as footwear, furniture, toys, electrical and electronics items by up to 20 per cent.