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Government's rupee fight to hit luxury goods, gadgets

business Updated: Aug 12, 2013 02:27 IST
HT Correspondent
depreciating rupee

Premium smart phones, LED TVs, high-end electronic items and luxury goods could turn costlier with the government likely to hike customs duty on some 'non-essential' goods in a bid to curb imports, arrest dollar outflow and halt the sliding rupee, which touched a record 61.80 to a dollar last week.

Besides, the government is likely to announce steps that will make it easier for companies to raise loans from overseas banks as authorities pull out all stops to lure precious dollars.

These measures are likely to be announced this week, with officials finalising over the weekend, the outlines of a strategy to stem the rupee's fall, sources said.

India is also set to float a first-of-its-kind proxy sovereign bonds that will allow the government to dig deep into the pockets of foreign pension and institutional funds.

This is expected to prop up the rupee, raise funds for building highways and also test international investors' confidence in a slowing economy that has been the target of unsparing criticism from global credit rating firms.

The government is learnt to have finalised the modalities for floating such proxy or quasi sovereign bonds with several banks. The bond, likely come with a guaranteed return of about 9%, will be structured as a surrogate medium-term sovereign bond.

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Sources also indicated that the RBI may pick for a vast matrix of instruments including staggering import dollar payments for a short-period to slow down dollar outflow.

Over the last few weeks, the government and Reserve Bank of India (RBI), has taken a slew of measures including easing of investment caps for foreign investors in a range of sectors and tightening liquidity by making funds costlier for banks.

The finance minister P Chidambaram had earlier said that the government would be looking at "some compression in non-oil and non-gold imports, especially of non-essential goods", citing examples of coal and electronic hardware.