India’ cuts excise duty 4% to stimulate demand
The Indian government on Sunday announced that excise duty for imported goods would be cut 4 percent across the board to stoke demand as the Asian nation’s growth story wavers under economic certainty.
The duty on everything from cars to washing machines to soap will see a reduced duty rate, according to the Times of India. The move came as part of a suite of measures taken by the government to stimulate India’s economy as it feels the weight of faltering global demand. Other measures include a 2 percent subsidy on loans to build export-oriented manufacturing projects and tax-free bonds to help build public and privately financed highway projects.
The aim is clear: don’t let the global economic crisis derail India’s arc of growth. For consumers it means prices for most imported goods will fall, and it gives shippers hope of more sales in a time when demand has been receding under the weight of inflation and less consumer spending power.
“The effectiveness of the 4 percent excise duty cut across the board will depend on whether the industry passes on the benefits to the customers or not and that remains to be seen,” said an editorial in the Times of India. “While auto manufacturers, already suffering a dip in demand, said they would pass on the entire benefit to the customers, makers of consumer durables and non-durables were not very inclined to do so right away.”
The duty cut is a welcome sight for foreign companies who import into India — they’ve long complained that India’s duty regime on most consumer goods was far too high — even though the cuts have only come as a result of the economic crisis. Whether they will stick as demand rebounds is a key question for the future.
