Import duty hike won't affect manufacturing or services, says former commerce secretary

Increase in import tariffs won't adversely affect India’s capacity to export or manufacture as the government addressed those products where the value chains are not there in India, said Rajiv Kher, former commerce secretary.

“You need to look at it in a much broader context," said Kher. "It is not just the action in terms of curbing imports but it is the larger implication and it will have over the broad sentiment in the markets."

Aimed at narrowing Current Account Deficit (CAD), the government on Wednesday raised import tariffs on 19 “non-essential items.”

AC, fridges and washing machines prices will increase as the government raises import duty to cut CAD.

“In the short-term every action can be justified and it does have some positive effect," said Arvind Virmani, former chief economic adviser.

In the long-term, it is a very slippery slope because each time you do something, some other breach opens up, he said. However, the long-term consequence is that the country has great opportunity to shift the supply chains from China, he added.