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Non-essential imports face curbs as exports dip

Non-essential imports face curbs as exports dip

In order to deal with a recent dip in exports, non-essential imports face a decline. Although there have been no official lists stating the industries that have been targeted, it is understood that markets such as gold and electronics will be considered. 

The government is considering taking action to limit imports of non-essential commodities as merchandise exports continued to decline year-over-year in February for the third consecutive month. Discussions have already taken place at the inter-ministerial level and with the indust

ry. In order to develop measures to limit such non-essential imports, the Ministry of Trade & Industry has shared HS-code (harmonised system) details of essential and non-essential import commodities with ministries. Limiting imports of non-essential goods is seen to be necessary for reducing the total trade deficit because exports are expected to suffer due to a slowdown in global demand.

According to February’s numbers, the trade imbalance has decreased month over month. Once more, it’s not just a statistical issue. The Commerce and Industry Minister convened a number of meetings where measures for limiting unnecessary imports were discussed. All officials, ministries, and ministers were in attendance. According to Sunil Barthwal, the secretary of commerce, those efforts are beginning to bear fruit.

He did not list the industries that import curbs are intended for, but it is understood that the business has been instructed to consider markets like gold and electronic equipment. The trade deficit decreased to $17.43 billion in February despite falling imports and declining exports for the third consecutive month.

India’s exports fell by 8.8% in February to $33.88 billion. The number of imports fell by 8.21% to $51.31 billion from $55.9 billion in the same month last year. Even though the process of creating a list of non-essential imports is still ongoing, Barthwal claimed that its effects were already visible in the import data for February.

Barthwal used the pharmaceutical sector as an example when he noted that it became crucial if a generic drug was being made. An API (active pharmaceutical ingredient) was being imported from China or elsewhere. The second evaluation involves determining whether the item is a raw material or an intermediary product, whether it is also produced locally, and whether there is enough capacity.

They are attempting to convince people that if there is enough capacity domestically and it is still being imported, it can be replaced. He continued by saying that it would, of course, rely on the demands of the global value chain.

Yet, if domestic production is able to produce goods of the same quality at the same cost, then it should definitely be used instead. According to him, since the entire PLI (production-linked incentive) plan aims to replace imports, these advantages only become apparent as manufacturing capacity rises

. The exercise, he continued, is being carefully designed so that it doesn’t affect all products in a single category. It also focused on import diversification—getting the same product from a different country for a lower price.

Budget 2022–23 included the most recent round of duty increases across a number of product categories. There are now higher customs taxes on products, including umbrellas, smart meters, earbuds, headphones, and fake jewellery. The majority of these goods were coming from China, either as finished goods or as knocked-down pieces that would be put together in factories in India.

In the last five years, import duties have been raised on products like apples and almonds. The most frequent price increases have been for solar panels and cellphone parts, largely to support and safeguard home manufacturers.

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