The Indian government has raised the duty on the import on polished diamonds and coloured gemstones from 5 to 7.5 percent, that on lab-grown diamonds by the same amount and on jewellery and components of jewellery from 15 to 20 percent. A similar import duty hike has been imposed on precious metal parts for gold- and silversmiths.
The duty increases on a total of 19 items including refrigerators, compressors for air conditioners and aviation turbine fuel, are part of the government’s efforts to reduce the country’s current account deficit (CAD), currently estimated at 2.8 percent of GDP.
The government has said that a large trade deficit and a rupee that has weakened against the US dollar have put a great deal of pressure on the CAD and the measures are intended to curb any further increase.
The items listed ran up an import bill of ₹86,000 crore ($11.85 billion) and the levy of import duties is likely to raise an additional ₹4,000 crore ($551 million) in revenue for the government. Economists said the impact of these measures on the CAD is likely to be modest.