New Delhi: India is likely to announce on Thursday curbs on imports of “non-essential" items to support the rupee, three government sources said, as Prime Minister Narendra Modi’s administration scrambles to tackle growing concerns over the economy.
The government could raise import duties on gems, jewellery and electronics but is unlikely to touch products used in sectors such as textiles, chemicals and pharmaceuticals, said one of the sources with knowledge of the matter.
“The PMO’s mandate is to control the current account deficit in the short term," said the source, referring to the prime minister’s office which is expected to sign-off on the measures later in the day.
Modi’s office has already gone through a list of the top 200 commodities that India imports, the source added.
All the sources declined to be identified ahead of the expected public announcement. The Finance Ministry did not immediately respond to an email seeking comment.
The rupee has lost about 12% of its value against the US dollar so far this year, hitting successive lows over the past few weeks amid a widening current account deficit and a selloff in emerging markets.
Indian financial markets were closed on Thursday for a public holiday.
The rupee is Asia’s worst performing currency this year, and a Reuters poll of 10 market participants showed on Thursday that short bets on the rupee were at a five-year high.
In addition to higher import duties, India is considering asking the central bank to offer dollars directly to oil marketing companies or through a state-run bank to reduce domestic demand for dollars.
The government could also look at raising dollars by tapping expatriates to invest in bonds for non-resident Indians.
The federal steel ministry has also proposed increasing duties on some steel products.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed)