Steep customs duty hike on several products to pinch Indian consumers

In an effort to lift the domestic Micro, Small and Medium Enterprises (MSMEs), keep imports down and raise revenue, the Indian government on Saturday hiked customs duty on several products, indicating a price rise soon for millions of consumers across the spectrum - from household appliances to electric vehicles and even toys.

A day prior to the Budget 2020, IANS had reported on that as a measure to boost domestic small and medium industry, the government may consider a hike in customs duty on over 300 items like toys, furniture, footwear, coated paper, rubber items among other in the Union Budget.

For the cellular mobile industry, the government hiked customs duty, from 10 per cent to 20 per cent, on printed circuit board assembly (PCBA) which is the key component in feature phones as well as smartphones.

The customs duty, which was earlier zero on vibrators/ringers and display panels of mobile phones, was increased by 10 per cent on both the components, indicating a price rise in feature phones as well as entry-level smartphones.

“The decision will push local manufacturing and require skilled labour to work on the SMT assembly lines for PCBs and will help local vendors. The prices will stablise as Indian manufacturers push towards CKD (completely knocked down) levels,” said Tarun Pathak, Associate Director, Counterpoint Research.

If you are a housewife, home appliances like tableware, kitchenware (porcelain, China, ceramic, clay, iron, steel, copper, aluminium), glassware, padlock, brooms, hand sieves, combs and vacuum flasks will be dearer as the customs duty was increased on all these items from 10 per cent to 20 per cent.

Electrical appliances, which includes fans, food grinders/mixers, hair removing appliances, water heaters, hair/hand dryers, overs, cookers, toasters, coffee makers and insect repellents, also saw customs duty doubled from 10 per cent to 20 per cent.

In bad news for global furniture and footwear brands like Swedish home furnishing multinational IKEA that aim to expand in India, the government on Saturday announced a raise in customs duty on imported footwear to 35 per cent from 25 per cent and on furniture goods to 25 per cent from 20 per cent. The news comes at a time when state governments like Telangana are planning to set up dedicated industrial park for furniture manufacturing, and IKEA expanding to reach out to shoppers across e-commerce platforms, both online and offline.

The Furniture Park will come up over 100 acres of land on the outskirts of Hyderabad and will house various furniture manufacturers.

Indo-Asian News Service