India reviews curbs on non-essential imports to support rupee, boost local manufacturing

New Delhi: The government is reviewing imports of non-essential items and goods where import dependence is low, among other measures to curtail the country's import bill and encourage domestic capacity creation, officials privy to the matter said. This is likely to be discussed at an interministerial meeting on the West Asia crisis scheduled next week.

If necessary, the government can impose higher duties or selective restrictions to curb such imports. India's merchandise trade deficit widened to $28.4 billion in April, from $20.7 billion in March, adding to balance of payments concerns amid portfolio outflows and tepid foreign direct investment.

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The rupee closed at a new record low of 96.5 a dollar on Tuesday, down from 96.34 on Monday. Any import curb would be "carefully calibrated" to avoid disruption to critical supply chains, and implemented only after proper deliberations, a senior official said.

Supporting Rupee
Next week's meeting will discuss measures to reduce import bills of non-essential items, condition of the rupee and other immediate measures to boost growth and generate revenue, officials said.

Officials from the ministries of finance, commerce and other key infrastructure will attend it.

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There are many items that are imported despite domestic production, "which is adding further strain to the rupee," the official cited earlier told ET. "We are talking to industries to avoid import of such items. However, we may take a call on further curbs, or increasing duties, if the situation requires such measures."

The Centre last week hiked customs duty followed by curbs on imports to curtail gold import bill.

"There is no point of speculating, but any measure will be carefully calibrated, timebound, and will not disrupt supply chain critical for manufacturing or any essential commodity," the official said. The move is aimed at supporting the rupee amid external pressures and, at the same time, boost domestic production, another official said.

The Centre has asked ministries to come up with a list of items where imports can be restricted.

Earlier this week, commerce minister Piyush Goyal advised importers to "avoid bringing in products that can be sourced domestically," highlighting the government's push to protect the rupee amid external pressures. "You should keep an eye on what goods are being imported. You will see opportunities in that too, what things can be manufactured in India," he had said.

The first official quoted above said, "Why do we need to import it when we can manufacture it? There are several items which are cheap (to import) but of substandard quality. This was flagged from time to time."