CII seeks GST rationalisation, lower import duties for MCE sector
Rationalising goods and services tax (GST) and import duties will improve the cost competitiveness of the mining and construction equipment (MCE) sector, which is pivotal for its growth and unlocking full potential, said a new report by Kearney and the Confederation of Indian Industry (CII) on Monday.
This comes as a discrepancy in the GST structure between components and final equipment increases the burden on manufacturers. In the MCE sector, there is an inverted GST structure. For example, components such as hydraulics and electronics are taxed at 18 per cent, while final equipment like crawler cranes, wheel loaders and drilling rigs are taxed at 12 per cent.
Hence, the report, Path to Viksit Bharat: Making India a Global Manufacturing Hub in the MCE, recommends rationalising GST and import duties to improve cost competitiveness. It also calls for setting up a national R&D consortium and a startup accelerator to foster innovation.
To boost domestic manufacturing, the report suggests: “The government should revise the flat 7.5 per cent basic customs duty by increasing duties on fully built equipment and imposing anti-dumping duties against persistently underpriced imports.”
Despite India’s robust engineering and fabrication capabilities, the MCE sector relies on imports: $2.6 billion worth of construction equipment components, including engines, hydraulics and electronics, are sourced annually from countries such as China, Japan and Germany. This dependence heightens vulnerability to global supply chain disruptions and input cost volatility.
