The Indian government has raised the basic customs duty on a number of items used in electronic and mobile communications in a move aimed at narrowing down the current account deficit.
Customs duty on items such as smartwatches, optical transport equipment and voice over internet protocol equipment, among others, has been hiked to 20 percent from the current 10 percent.
The duty hike comes into effect from Oct. 12.
The government also removed the exemption for printed circuit board assembly of mobile phones and optical transport equipment, on which it has levied 10 percent customs duty, according to the notification.
This is the Indian government's effort to curb non-essential imports to further prevent widening of the current account deficit and stem the fall of the rupee. The local unit, which has plummeted for six straight months in the longest stretch since 2002, is seen hitting 75 per U.S. dollar by the year-end, according to the median of 10 analysts surveyed by Bloomberg.
The government on Sept. 26 increased customs duty on 19 items that had a total value of about Rs 86,000 crore in 2017-18.
The second round of customs duty hike on certain communication items seems to be in line with the government's continued efforts to further curtail the increasing current account deficit, Krishan Arora, an indirect tax partner at Grant Thornton India LLP, told BloombergQuint.
This will possibly encourage domestic manufacturing and the ‘Make in India' campaign, Arora said.
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