Budget 2022 - Customs duties rejigged to promote Make in India & exports

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Budget 2022 - Customs duties rejigged to promote Make in India & exports

Budget 2022 - Customs duties rejigged to promote Make in India & exports

Industry News
Feb 01,22

Concessional rates on capital goods to be gradually phased out and attract a moderate tariff of 7.5%. More than 350 entries to be phased out from customs duty exemption to promote Make in India and Aatmanirbhar Bharat. Graded duty rate structure to boost domestic electronics manufacturing

Budget 2022 - Customs duties rejigged to promote Make in India & exports

New Delhi

To promote Make in India, the Government proposes to phase out the concessional rates in capital goods and project imports gradually and apply a moderate tariff of 7.5 per cent. Announcing this while presenting the Budget 2022-23, Union Finance Minister Nirmala Sitharaman clarified that certain exemptions for advanced machineries that are not manufactured within the country will continue. Further, the Government would introduce few exemptions in cases like specialised castings, ball screws and linear motion guide to encourage domestic manufacturing of capital goods.

She stated, Ã¢â‚¬Å“Our experience suggests that reasonable tariffs are conducive to the growth of domestic industry and Ã¢â‚¬ËœMake in IndiaÃ¢â‚¬â„¢ without significantly impacting the cost of essential imports. Several duty exemptions granted to capital goods in various sectors such as power, fertilisers, textiles among others have hindered the growth of the domestic capital goods industry. Similarly, project import duty concessions have also deprived the local producers of a level playing field in certain areas like coal mining, power generation among others.Ã¢â‚¬Â

Recalling that the Government has rationalised several customs duty exemptions in the last two budgets, Sitharaman said that after extensive consultations along with crowd sourcing the Government proposes to phase out more than 350 exemption entries. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices, drugs among others. Further, as a simplification measure, several concessional rates are being incorporated in the Customs Tariff Schedule itself instead of prescribing them through multiple notifications. This review would simplify customs rate and tariff structure particularly in sectors such as chemicals, textiles and metals, and minimise disputes. Nirmala Sitharaman added that removal of exemption on items which are or can be manufactured in India and providing concessional duties on raw material that go into manufacturing of intermediate products will go many a step forward in achieving the objective of Ã¢â‚¬ËœMake in IndiaÃ¢â‚¬â„¢ and Ã¢â‚¬ËœAtmanirbhar BharatÃ¢â‚¬â„¢.

The minister pointed out that customs reforms have played a very vital role in domestic capacity creation, providing level playing field to MSMEs, easing of raw material supply side constraints, enhancing ease of doing business and being an enabler to GovernmentÃ¢â‚¬â„¢s policy initiatives like PLIs and Phased Manufacturing Plans. In alignment with these objectives sector specific proposals are as follows:

To facilitate domestic manufacturing of high growth electronic items, wearable and hearable devices, and electronic smart meters, FM Nirmala Sitharaman announced that customs duty rates would be calibrated to provide for a graded rate structure. Duty concessions are also being given to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items.

To enhance domestic value addition, the Government, through budget 2022-23, proposes to reduce the customs duty on certain critical chemicals namely, methanol, acetic acid and heavy feed stocks for petroleum refining, while increasing the duty on sodium cyanide for which adequate domestic capacity exists.

To incentivise exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods. Nirmala Sitharaman added that duty is also being reduced on certain inputs required for shrimp aquaculture to promote their exports.