Hitting back at the US on tariff war, India has increased customs duty on 29 products, including pulses and iron and steel products, which are imported from the US. The duty hike would come into effect from August 4, according to the Finance Ministry’s notification released on Thursday.
The move comes at time when a trade war-like situation that has been emerging as the United States projects protectionist policies and hikes import duties.
The European Union too has decided to levy higher import duties on variety of US products and similar action is being contemplated by China. As far as India’s effort on this issue is concerned, India had submitted to the WTO a list of 30 items last week, on which it proposed to raise customs duty by up to 50 per cent.
The decision to hike duties is in retaliation to the unilateral increase in tariff by the US on certain steel and aluminum products earlier this year which had tariff implication of $241 million on India. The duty hike by India will have equivalent tariff implications for the US.
India exports steel and aluminum products worth about $1.5 billion to the US every year. India’s exports to the US in 2016-17 stood at $42.21 billion, while imports were $22.3 billion.
Focusing on some specific products, the duty on some daily-used items like chickpeas, Bengal gram (chana) and masur dal has been increased to 70 per cent from 30 per cent earlier, while that on lentil has been hiked to 40 per cent from 30 per cent. Besides, shelled almonds imported from the US will now attract import duty at Rs 120 per kg as against Rs 100 per kg earlier. Almonds in shell will attract import duty at the rate of Rs 42 per kg as against Rs 35 per kg.
Import duty on walnut in shell will also attract customs duty at the rate of 120 per cent as against 30 per cent earlier, while apples will attract import duty of 75 per cent as against 50 per cent earlier.
The duty on boric acid has been hiked to 17.50 per cent, while the same on phosphoric acid has been raised to 20 per cent from 10 per cent each earlier.
Import duty on diagnostic reagents has been doubled to 20 per cent, and binders for foundry moulds have also been hiked to 17.5 per cent. Flat rolled products on iron has been raised to 27.50 per cent from 15 per cent earlier, while certain flat rolled products on stainless steel would now attract 22.50 per cent duty as against 15 per cent earlier.
Duty on artemia, a kind of shrimp, has been raised to 30 per cent.
The Finance Ministry in the notification said there is no mention of duty hike on motorcycle with engine capacity of over 800cc. As per the list, India submitted to the WTO, it had proposed to hike customs duty on specified motorcycles, which primarily include Harley Davidson and Triumph, to 50 per cent.
For automobiles and earth moving equipment, SIM socket/other mechanical items (metal) for use in manufacture of cellular mobile phones, the duty has been hiked to 25 per cent from 15 per cent earlier.
Reacting on the development, Deloitte India Partner MS Mani said that on several products such as pulses the increase is very steep (30 per cent to 70 per cent), while for iron and steel products, the increase is at least 50 per cent of the existing rate (from 15 to upwards of 22.5 per cent).
“The increase in the customs duties on goods originating from the USA was expected, but the magnitude of the increases would have been unexpected. These increases would make the domestic products cheaper compared to imports and lead to domestic manufacturing/demand pick-ups as a corollary,” Mani said.
On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminum items, a move that has sparked fears of a global trade war. India has said the duty imposed by the US has affected steel exports by $198.6 million and aluminum shipments by $42.4 million. India has also dragged the US to the World Trade Organisation’s (WTO) dispute settlement mechanism over the imposition of import duties on steel and aluminum.