Winning Bizness Desk

Mumbai. Finance Minister Nirmala Sitharaman is going to present the Union Budget on 1 February 2023 and this will be the last full budget of the Modi government before the Lok Sabha elections in 2024. The Union Budget is being prepared against the backdrop of frequent rate hikes by several central banks and high inflation across the world. In this budget, an announcement can be made to increase import duty on many types of items. It has been learned from sources that in order to boost its efforts to make 'Aatm-nirbhar India', the Modi government is considering increasing the custom duty on about 35 items in the Union Budget 2023. According to him, some of the items on which the government may increase custom duty include private jets, helicopters, high-end electronics, plastic goods, jewellery, high-gloss paper and vitamins. The government's move is aimed at curbing imports and encouraging local manufacturers of some of these products. The commerce and industry ministry had earlier asked several ministries to provide lists of non-essential imports whose imports should be reduced through tariff hikes.

Current Account Deficit is all-time high

According to the report, India's Current Account Deficit (CAD) has reached its all-time high. According to the recently released Reserve Bank of India (RBI) data, it increased to $36.4 billion in July-September (Q2). Talking about the percentage of Gross Domestic Product (GDP), the country's CAD increased to 4.4% of GDP in the September quarter. This figure was earlier 2.2% in the April-June quarter. It was 1.3% of GDP in the second quarter of 2021-22 a year ago. At the same time, policy makers are also aiming to reduce imports of non-essential goods as part of a long-term strategy to encourage domestic production. Import tariffs on several items have already been raised in recent years to support the government's 'Make in India' and 'Atmanirbhar Bharat' initiatives. Quality control orders have also been issued to curb cheap imports of non-essential goods.

Boost to the Make in India initiative

According to experts, if the hike in import duties is implemented only on certain finished products, it will not only increase the revenue but also give a boost to the Make in India initiative. "The choice of these finished products should depend on their position in the global supply chain and how important they are to the overall Indian economy," said Bipin Sapra, partner, EY India. The government launched the Make in India program in 2014. The import duty on many items has been increased since then. In last year's budget, import duty was increased on imitation jewellery, umbrellas and earphones. Before that, import duty on gold was increased.