Union Budget may tweak customs duties, ensure ease of import compliance
The Union Budget is likely to bring about fresh changes in Customs duties and procedures with the aim of fulfilling two key objectives, protect and encourage domestic value addition as part of the global supply chain, and have reasonable tariff space for concessions under various free trade agreements (FTAs) currently under negotiation people aware of the matter said.
The changes will be done to reduce import dependence on manufactured products, protect the environment, and to safeguard the interests of Indian farm sector, and micro, small and medium enterprises (MSMEs), the people added, requesting anonymity.
The government is considering reducing import duties on a range of inputs including raw materials for the manufacturing of steel, aluminium, textiles, jewellery, pharmaceuticals, medical devices, electronic components, telecom network products, electrical vehicles (EVs), and also on liquefied natural gas (LNG) to reduce fuel costs, one of the people said. India is the fourth-largest importer of LNG in the world.
“Duty reductions for several sectors under the Production-Linked Incentive (PLI) scheme are under consideration,” a second person said, adding that the Budget may also expand the list of PLI sectors. The government currently gives incentives worth INR1.97 lakh crore in key sectors to create significant scale, nurture what it calls global champions, and generate employment.
Addressing the Merchants’ Chamber of Commerce & Industry (MCCI) on January 21, commerce and industry minister, Piyush Goyal, said: “We’ve had a very successful experience on the PLI front particularly in mobile phone manufacturing, and we are hoping to replicate it in other sectors like semiconductors, container manufacturing etc. Fourteen sectors now have PLI schemes.”
Some of the key sectors under the PLI scheme include solar PVs (photo voltaics), white goods, steel, food processing, pharmaceuticals, telecom, textiles, automobile, and auto components.
“There are also proposals to raise the customs duty on certain items to check the cheaper import of products that are manufactured domestically. The government is also negotiating FTAs, and may have to keep differential tariffs for FTA countries and other nations. This may require raising tariffs of some items,” the first person added.
Sectors likely to see a tariff hikes include solar modules, steel and aluminium products and consumer electronics he added.
The Union Budget will be presented by finance minister Nirmala Sitharaman on February 1.
