Customs duties cut, more rate tweaks soon: Nirmala
Finance minister Nirmala Sitharaman said that she would also undertake “a comprehensive review” of the rate structure over the next six months.
The budget on Tuesday tweaked customs duties on several items to provide relief to people, boost domestic manufacturing and promote export competitiveness covering a range of products such as life-saving medicines, rare earth minerals and precious metals, including gold and silver.
Speaking about duty rationalisation, Union finance minister Nirmala Sitharaman said that she would also undertake “a comprehensive review” of the rate structure over the next six months to rationalise and simplify them for ease of trade, removal of duty inversion and reduction of disputes.
She exempted cancer medicines such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab from import duty and reduced basic customs levies on x-ray tubes and flat panel detectors for use in medical x-ray machines. The duty reduction of medical equipment was undertaken under the phased manufacturing programme, so as to synchronise them with domestic capacity addition, she said.
The move removed duties on all types of polyethylene for use in manufacture of orthopaedic implants and special grade stainless steel, titanium alloys, cobalt-chrome alloys, and all types of polyethylene for use in manufacture of other artificial parts of the body.
In order to enhance the competitiveness of exports in the leather and textile sectors, she reduced basic customs duties on their inputs. “My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers surmount,” she said.
The finance minister announced reductions in customs duties on precious metals, including gold, silver and platinum to boost gem and jewellery industry, a labour-intensive sector. While levy on gold and silver was reduced from 15% to 6%, it was brought down from 15.4% to 6.4% on platinum.
Speaking about a steep reduction in customs duty on gold, revenue secretary Sanjay Malhotra said the decision is mainly aimed at boosting India’s gem and jewellery industry. “The sector is very important for us as it contributes approximately over 8% of our total exports and employs approximately 55 lakh people. We have reduced import duty [on gold and other precious metals] keeping this in mind,” he said. The reduction in duty may also curb gold smuggling.
The budget also slashed the levy on mobile phones. The last six years have seen a three-fold increase in domestic production of mobile phones and almost a hundred-fold jump in exports of mobile phones. “In the interest of consumers, I now propose to reduce the BCD on mobile phone, mobile PCBA and mobile charger to 15%,” Sitharaman said.
She also announced full exemption of customs duties on 25 critical minerals and reduced the levy on two of them. This will benefit sectors like space, defence, telecommunications, high-tech electronics, nuclear energy and renewable energy, where these rare earth minerals are critical, she said.
The 25 critical minerals are Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Potash, REE, Rhenium, Strontium, Tantalum, Tellurium, Tin, Tungsten, Vanadium, Zirconium, Selenium, Cadmium, Silicon other than Quartz and Silicon Dioxide. Earlier, they attracted customs duty ranging from 2.5% to 10%.
Duty on agricultural products such as shea nuts has been reduced from 30% to 15%, prawn and shrimp feed and fish feed from 15% to 5%. The inputs required for manufacture of prawn and shrimp feed or fish feed such as mineral and vitamin pre-mixes, krill meal, fish lipid oil, crude fish oil, algal prime (flour) and algal oil have been exempted from the levy.
The levy on capital goods for use in petroleum exploration operations is exempted from tax. Similarly, capital goods used in manufacture of solar cells and modules reduced from 7.5% to zero.
The budget raised customs duty on ammonium nitrate from 7.5% to 10%, PVC flex films/flex banners from 10% to 25% and laboratory chemicals from 10% to 15% to check dumping and encourage domestic manufacturing.
Duties have been raised on solar glass for manufacture of solar cells or modules from zero to 10% with effect from October 1, 2024. Similarly, tinned copper interconnect for manufacture of solar cells or modules would attract a 5% duty from October 1.
“Energy transition is critical in the fight against climate change. To support energy transition, I propose to expand the list of exempted capital goods for use in the manufacture of solar cells and panels in the country. Further, in view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them,” the minister said.
Tushar Aggarwal, co-founder, Tattvam Group, said: “This exemption on specified capital goods used in the manufacturing of solar panels and solar cells marks a pivotal step towards bolstering India’s renewable energy sector, particularly the solar energy sector. By exempting specified capital goods from customs duty, the Government has taken a crucial step towards incentivising domestic production, which will significantly reduce our industries’ dependency on imports of solar panels and cells.”
“The customs duty rate changes proposed in the Union Budget 2024 are designed to boost exports, enhance local value addition and domestic manufacturing, encouraging growth and sustainability,” said Ranjeet Kumar Agarwal, president of ICAI.