Duty on import of gold, silver and non-essential goods is set to go up even as the government announced a slew of measures including easier overseas borrowing norms to fetch an additional $11 billion dollars this fiscal to arrest rupee fall and check the burgeoning current account deficit or CAD.
The interest on foreign currency non-resident accounts has been liberalised to attract more deposits.
The customs notifications on the import of these items will be placed in Parliament tomorrow, Finance Minister P Chidambaram told a press conference hours after he made a statement in both the Houses on measures to contain the CAD at $70 billion or 3.7 per cent of the GDP.
He refused to disclose the actual figures on import duty saying Parliament was in session and he would not make any statement outside.
"CAD is a problem (but) we have solutions. We will implement the solution (and) there is no room for panic", the Finance Minister told reporters, adding these initiatives would help in reducing foreign exchange volatility and contain CAD.
"CAD is as much a red line as fiscal deficit. If we can contain CAD, sentiment about currency market and rupee will significantly improve", he said.
As regards the measures to increase capital flows, Mr Chidambaram said that permission would be given to IRFC, PFC and IIFCL to collectively raise $4 billion through quasi-sovereign bonds for the infrastructure sector.
Mr Chidambaram said that PSU oil companies would be permitted to raise additional External Commercial Borrowings or ECBs to the tune of $4 billion.
He further said the liberalisation of the ECB norms and non-resident deposit schemes would fetch $2 billion and $1 billion respectively.
The FinaceMinister also expressed satisfaction over decline in oil and gold imports in the current fiscal.
"We may save $4 billion in gold import and $1.5 billion in oil import", Mr Chidambaram said, adding the gold import in the current fiscal was likely to come down to 850 tonnes from 950 tonnes in 2012-13.
As regards oil, he said, there has been a reduction in growth of consumption during April-June 2013 to 0.7 per cent from 10.3 per cent during the corresponding period last year.
Government sources said the likely hike in gold and silver import duties could lead to increase in smuggling but it has enough tools to tackle the problem.
On liberalising non-resident external (NRE) and foreign currency non-resident deposit schemes (FCNR), Mr Chidambaram said incremental flows into these schemes would be exempt from cash reserve ratio or CRR and statutory liquidity ratio or SLR requirements.
In the FCNR accounts, interest on deposits with a maturity of three years or more has been deregulated. "So all together in liberalising FCNR, NRE deposit schemes we expect to get a billion dollars", he said.
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