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The Finance Ministry has announced that there might be a withdrawal of import duty concessions on approximately 97 items, under a reorganisation of the customs duty structure. On one hand, this decision might lead to a hike in prices, on the other hand, it might give impetus to entities to manufacture these goods domestically.
The Central Board of Indirect Taxes and Customs (CBIC) has sought feedback from the public and other stakeholders regarding this matter. The proposed list includes items ranging from upholstery fabrics and printed circuit boards to artwork, drugs and chemicals and has been released for public consultation until August 10.
CBIC announced that it has sought suggestions pertaining to the need for a review of the listed notification along with amendments in phrasing to ensure other factors like clarity, consolidation and extent of use etc. CBIC also said that it has invited the pertinent views of importers, exporters, people involved in the domestic industry and trade associations along with all stakeholders especially in international trade and the public on this subject.
Vocal for local
Sitharaman had announced during her Union Budget speech that the structure of customs duty will be reorganised this year.
According to the FM, this move is aimed at boosting production of goods at the local level coupled with improved access to raw materials and subsequently decreasing dependence on imports. It is also expected to add to the incentives given for local production in sectors like automobiles, auto parts, electronic, technology and telecom products. Incentives to new factories with added higher tariffs on imported goods will benefit local makers and give them an edge over cheap imports. She had also said that 400 old exemptions would be reviewed this year and a revised customs duty structure would be put in place effective from October 1, 2021, following extensive consultations.
The Union Budget for FY22 had earlier hiked import duty on cotton, plastic, leather, gem and jewellery and many electronic items. It had slashed the rates which were imposed on certain raw materials like naphtha to bring down the cost of production.