India on Monday imposed a 36 percent duty on flat-screen televisions that travellers bring back from other countries, seen as another step to support a falling rupee. The move, however, will do little to help the economy but will cheer television manufacturers in India and hit grey markets, experts said.
India has taken various measures in recent months to deter the import of commodities such as gold as Asia’s third-largest economy tries to tamp down its current account deficit and a weak rupee that touched record lows below 65 per dollar this week.
The duty will not have significant effect on the rupee or on the current account deficit, which is estimated at 3.7 percent of the gross domestic product this year. With only seven months’ worth of foreign exchange reserves, India is taking a number of measures to narrow the gap between its imports and exports, though trying to discourage television purchases in foreign currency might not do much more than set an example.
“It is more symbolism that we are going to tax or discourage the import of luxury goods so maybe the next thing that will come will be (a duty on) import of other things like wine or cars,” said D H Pai Panandiker, president of RPG Foundation, a private think tank. “It’s such a small import that it is not going to make a very big difference to the current account deficit.”
Passengers last year brought in more than a million television sets from other countries, according to government estimates, taking advantage of a baggage allowance that exempted units costing up to 35,000 rupees ($547) from any duty.