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Business News/ Politics / Policy/  Govt coffers swell on boost from import duty receipts
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Govt coffers swell on boost from import duty receipts

A flood of imports swelled the Centre’s customs duty receipts in the three months to November, reversing the declining trend of most of the first half of the current fiscal, official data showed

India’s merchandise imports soared nearly 30% between April and November to $493.61 billion against $381.17 billion during the comparable period last year, data from the commerce ministry showedPremium
India’s merchandise imports soared nearly 30% between April and November to $493.61 billion against $381.17 billion during the comparable period last year, data from the commerce ministry showed

NEW DELHI : A flood of imports swelled the Centre’s customs duty receipts in the three months to November, reversing the declining trend of most of the first half of the current fiscal, official data showed.

That leaves excise duty the only laggard in the Centre’s tax revenue collections so far this year, which has contracted from year-ago levels. The dramatic recovery in customs duty receipts comes as a relief to policymakers trying to balance the budget amid a surge in subsidy outgo.

Graphic: Mint
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Graphic: Mint

The Centre collected over 86,200 crore in customs duty in the first half of the current fiscal, which was around 7% below what it collected in the same period a year ago. Customs duty collections began picking up in September itself, and in the three months to November, the trend reversed. At the end of November, customs receipts stood at 1.41 trillion, a jump of more than 12% from the year-ago period, data from the Controller General of Accounts (CGA) showed.

India’s merchandise imports soared nearly 30% between April and November to $493.61 billion against $381.17 billion during the comparable period last year, data from the commerce ministry showed.

“Improvement in the volume of imports and firmer prices in global markets for many items in India’s import basket could be the reasons for the jump in dollar value of imports and the recovery in customs duty collections," said Abhishek Jain, partner, indirect tax at KPMG.

Experts said given that there has not been any major duty revision or legislative change in duty recently, the jump in customs collection could be due to a boost in cross-border trade, including in volumes.

“India’s exports are import-intensive. An increase in the volume of imports may point to an increase in economic activity, and many of these inputs may be for local manufacturing," said D.K. Srivastava, chief policy adviser at EY India.

In April-October, India’s factory output showed a 5% jump from a year ago, according to data from the National Statistical Office. Private surveys, too, show positive sentiments in the domestic manufacturing sector. According to S&P Global, the seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI) at 57.8 in December, up from 55.7 in November, pointed to a robust improvement in the health of the sector that was the best seen since October 2020.

CGA data also shows that the Centre’s gross tax receipts have grown 16% to 17.8 trillion in April-November, driven by growth in direct and indirect taxes. Experts said the Centre’s gross tax revenue at the end of the current fiscal may exceed budget estimates by close to 3.5-4 trillion, helping it meet the additional subsidy requirement comfortably and stick to its fiscal deficit target of 6.4% of gross domestic product this year. This is also expected to enable the Centre to announce a fiscal consolidation road map in the FY24 Union budget to be presented on 1 February.

India’s import growth between April and November this fiscal was driven by items such as silver, coal, fertilizers and petroleum. While cotton imports surged by 259% during the period amid a global cotton shortage, silver, coal and fertilizer imports jumped 179%, 97% and 62%, respectively. Meanwhile, petroleum (crude and products), the largest imported item by value, also surged 52% during the period as India’s energy requirement bounced back following covid-19 induced lockdowns.

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ABOUT THE AUTHOR
Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Published: 09 Jan 2023, 12:42 AM IST
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