In an attempt to make imports costlier and domestically produced goods more competitive, the government tweaked customs duty on a range of items such as steel, cement and commercial vehicles, on Saturday.
“I propose to reduce the rates of basic customs duty on certain inputs, raw materials, intermediates and components so as to minimise the impact of duty inversion and reduce the manufacturing cost in several sectors,” said finance minister Arun Jaitley.
In the Union Budget 2015-16, the government levied a four-fold customs duty hike — from 10% to 40% — on commercial vehicles. This will lead to an effective two-fold increase in duty to 20% on these vehicles, making fully-imported trucks and buses dearer. The increase will impact companies such as Mercedes Benz, Scania and Volvo.
“The increase in customs duty for commercial vehicles is disappointing, but overall the positives in the budget outweigh the negatives,” said Anders Grundstromer, managing director, Scania India.
The duty on knocked-down units that are used for assembling vehicles in the country has, however, been left unchanged.
Similarly, the government has increased import duty on steel from 10% to 15% to curb rising steel imports. Though the hike does not change the effective rate of duty on steel, it is being seen as an enabling resolution to be used whenever there is a surge in imports. Import of steel has grown by around 60% in the first 10 months of 2014-15.