Ahike in customs duty in the 1998-99 budget seems a distinct possibility inview of the huge revenue shortfall faced by the government and mounting pressure for protection against cheaper imports.
Customs duty is likely to be raised by an average 15% with the dual purpose of increasing revenue and giving a fillip to industrial recovery, finance ministry sources indicated.
During pre-budget discussions with finance minister Yashwant Sinha, trade and industry bodies had demanded hikes in customs and countervailing duties, saying the average cut of 27% in import duties by the United Front regime had affected domestic industry.
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Even China, which initiated the liberalisation process as early as 1979, had not brought down customs duty below 50%. But, in India, customs duties have come down drastically fromaround 140% in 1991-92 to an average 27%, they said, adding, this has made imports cheaper than indigenous machinery and products.
Finance ministry sources pointed out that revenues from customs and excise fell by a massive Rs 16,000 crore during 1997-98, of whichcustoms alone accounted for Rs 11,000 crore.
All India Association of Industries president Vijay G Kalantri said an average 40% increase in the customs duty would make domestic goods including capital goods price competitive.