The government is also looking at containing import of gold as it is the second highest commodity imported into the country, after crude oil
The government may raise import duty on some steel products, to contain inflow of inward shipments of the alloy into the country, as part of its broader strategy to reduce current account deficit (CAD) by containing imports of non-essential items.
As part of efforts to arrest the depreciation of rupee that has weakened more than 12 percent since the beginning of the year, Finance Minister Arun Jaitley had last week said that the government will take necessary steps to cut down non-essential imports including gold, mobile phones, electronics, etc.
The final list of non-essential imports will be decided by the end of this week and is being consulted with respective ministries.
The steel ministry has proposed raising import duty on five product categories of the alloy -- stainless steel, flat and long products, electrical steel and alloy steel bars -- to 15 percent from the effective import duty that ranges between 5-12.5 percent, a source in know of the matter told Moneycontrol.
The proposal is still under consideration and will be approved after commerce and finance ministry examines and then gives a go ahead, the source said.
Curb on gold imports?
The government is also looking at containing import of gold as it is the second highest commodity imported into the country, after crude oil. Increasing basic customs duty on the yellow metal could be one of the options.
Inward shipments of mobile phones, electronics, and some other items could also be curbed, sources said.
While some items may attract increased basic customs duty, quantitative restrictions could be considered for other commodities.
The development comes after the government on Friday announced a five-point strategy to arrest the rupee’s slide, get foreign funds flowing back to India and control the current account deficit.
After a late evening meeting that the Prime Minister had with Finance Minister Arun Jaitley and Reserve Bank of India Governor Urjit Patel, among others, Jaitley said that the measures include removal of withholding tax on Masala bonds, relaxation for foreign portfolio investors and curbs on non-essential imports to contain the widening CAD, which has inflated to 2.4 percent of GDP in the April-June quarter.At 1320 IST, Nifty Metal index was trading at 3,688, up 1.09 percent from the previous close. Tata Steel was up 1.74 percent at Rs 623.40, while JSW Steel was trading at Rs 415, up 1.93 percent from the previous close.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.