A customer counts Indian one-hundred rupee banknotes before depositing them in India. (Photographer: Dhiraj Singh/Bloomberg)

India Plans to Limit Imports to Bolster the Rupee

(Bloomberg) -- India has set targets to cut import of goods including electronics and steel to reduce demand for dollars and help bolster the rupee, people with knowledge of the matter said.

Prime Minister Narendra Modi’s government has asked ministries to finalize plans to reduce inbound shipments of certain steel products, electronic goods such as mobile phone components, some petroleum products and capital goods, the people said, asking not to be identified as the matter is private. The plan is to reduce imports of these items by 1.5 percent to 4 percent, the people said.

A fall in the rupee, Asia’s worst-performing major currency this year, at a time when oil prices are rising threatens to widen the nation’s trade deficit and fuel inflation. Measures announced by finance minister Arun Jaitley to bolster the currency haven’t helped so far. Earlier this month, the minister said the government will limit “non-essential imports.”

India’s imports of iron and steel rose 27 percent to $10.43 billion in the year ended March 2018, while overseas purchases of precious and semi-precious stones surged 44 percent to $34.3 billion in the period, according to government data. Calls made to commerce ministry spokeswoman weren’t immediately answered.

The ministries have been asked to design an export strategy to increase outbound shipments in the short term. Export promotion councils have been asked to chalk out geographical destination-wise strategy and markets that would help in maximizing exports in short-run, the people said.

Pharmaceuticals, processed food in agriculture, electronic items like static converter and gems and jewelry are a few sectors currently on the government’s radar for increasing exports. The commerce ministry is also looking at under-utilized free trade agreements including that with the Association of Southeast Asian Nations to boost farm, textile and metals exports, the people said.

©2018 Bloomberg L.P.