In an effort to curb non-essential imports and improve the widening current account deficit, the government has increased basic customs duty on electronic and telecom equipment to 20 per cent from the current 10 per cent. The duty hike will come into force from today, the Central Board of Excise and Customs (CBIC) said in a notification. Before this, the government had doubled the import duty on 19 items, including air conditioners, household refrigerators and washing machines (less than 10 kg), to 20 per cent on September 26. Experts suggest the current move will encourage local manufacturing, thus giving a boost to the 'Make in India' initiative of the government.

The items that will face customs duty hike this time include smartwatches, optical transport equipment and voice over internet protocol equipment. Certain inputs used in the communication industry such as Printer Circuit Board Assembly (PCBA) will also see a hike in the import duty.

Import duty on populated, loaded or stuffed printed circuit boards of all goods other than mobile phones, base station and optical transport equipment has been raised to 10 per cent. Duty has also been raised to 20 per cent from 10 per cent for base stations and for machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, voice frequency telegraphy, digital loop carrier systems and multiplexers, it said.

Higher crude oil prices and falling value of rupee is widening the current account deficit, which has been a cause of concern for the government. The rupee touched a historic low of 74.50 to a dollar in an intra-day trade Thursday, before closing at 74.12. The domestic currency has depreciated by over 13 per cent since the beginning of 2018. The domestic currency on Friday gained 38 paise to 73.74 against the US dollar in early trade in the forex market after global crude prices eased. The current account deficit (CAD) of the country widened to 2.4 per cent of the GDP in the first quarter of 2018-19.

According to experts, the government's efforts have been largely aimed at controlling dollar outflow by imposing higher customs duties to curb demand and consumption on products ranging from steel and aluminium to consumer products. However, the government should work towards earning more dollars rather than preventing dollars from leaving our shores, they opine.