India hits back at US; hikes import duty on 29 products

India has decided to raise customs duty on 29 products, including almond, walnut and pulses, imported from the US as a retaliatory action against the tariff hike by Washington.

The duty hike would come into effect from August 4, the finance ministry said in a notification.

While import duty on walnut has been hiked to 120 per cent from 30 per cent, the same for shelled almond has been increased to Rs 120/kg from Rs 100/kg earlier.

The import duty on chickpeas, Bengal gram (chana) and Masur dal has been increased to 70 per cent from 30 per cent earlier, while that on lentils has been hiked to 40 per cent from 30 per cent.

The ‘tit-for-tat’ duty hike decision by India is similar to that of European Union and China which decided to levy higher import duties on a variety of US products in retaliation to the protectionist policies adopted by America.

With the higher customs duty coming into effect from August 4, this would give ample time to the US to take a considered view on all the contentious bilateral trade issues with India.

A meeting of senior officials of India and the US is scheduled here for June 26-27 and duty hike decision is likely to figure in the discussion, sources said.

As per the notification, apples imported from the US will attract the 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, while binders for foundry moulds has been hiked to 17.5 per cent.

Flat-rolled products on iron have 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.

Last week, India had submitted to the WTO a list of 30 items on which it proposed to raise customs duty by up to 50 per cent.

In the notification, there is no mention of duty hike on a 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 include Harley Davidson, to 50 per cent.

For automobiles and earth moving equipment, SIM socket/other mechanical items (metal) for use in the manufacture of cellular mobile phones, the duty has been hiked to 25 per cent from 15 per cent.

Deloitte India Partner M S Mani said that on several products such as pulses, the increase is very steep (30 per cent to 70 per cent). 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.

The decision to hike duties is in retaliation to the unilateral increase in tariff by the US on certain steel and aluminium products earlier this year which had tariff implication of USD 241 million on India.

The duty hike by India would have equivalent tariff implications for the US.

On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminium 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 USD 198.6 million and aluminium shipments by USD 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 aluminium.

India exports steel and aluminium products worth about USD 1.5 billion to the US every year.

India’s exports to the US in 2016-17 stood at USD 42.21 billion, while imports were USD 22.3 billion.