To boost domestic manufacturing and promote local value addition, Budget 2024-25 has proposed reduction or withdrawal of customs duties on a slew of items including gold & silver, mobile phones & chargers, medicines & medical equipment, critical minerals and inputs for leather & textiles industry. Withdrawal of exemptions or increase in customs duties have also been announced for some sectors such as chemicals and telecom equipment to incentivise domestic manufacturing.
“A comprehensive review of the customs duty rate structure will also be carried out over the next six months to rationalise and simplify it for ease of trade, removal of duty inversion and reduction of disputes,” Finance Minister Nirmala Sitharaman said in her budget speech on Tuesday.
The focus also seems to be on bringing down customs duty on finished goods where a sector has achieved maturity in domestic manufacturing and reducing dispute with the authorities, Gulzar Didwania, Partner, Deloitte India said.
The BCD (basic customs duty) on mobile phone, mobile PCBA and mobile charger has been reduced to 15 per cent while exemption from BCD has been extended, subject to conditions, on oxygen-free copper for the manufacture of resistors and certain parts for the manufacture of connectors for increased value addition in electronics industry.
Anant Jain, Head of Customer Success - India, GfK said, “The reduction in the BCD on mobile phones, mobile PCDA (Printed Circuit Design Assembly), and mobile chargers is expected to make mobile devices and accessories more affordable, thereby boosting consumer demand and driving growth in the tech industry.”
Providing big relief to the gems & jewellery industry, customs duties on gold and silver have been reduced to 6 per cent from 15 per cent and that on platinum to 6.4 per cent from 15.5 per cent. This move willenhance sales by making these precious metals more affordable, said Amit Pratihari, MD, De Beers Forevermark.
To bring down the cost of production of steel and copper, which are important raw materials, the budget also proposed to remove the BCD on ferro nickel and blister copper.
Exemption from customs duties has been proposed for three more medicines for cancer patients and a reduction in duties has been announced for x-ray tubes & flat panel detectors for use in medical x-ray machines under the Phased Manufacturing Programme, to synchronise them with domestic capacity addition.
As many as 25 critical minerals used in sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics have been extended full exemption from customs duty while duties have been reduced for two more.
“This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” Sitharaman said.
Giving an export fillip to the leather and textile sectors, the budget proposed to reduce BCD on real down filling material from duck or goose and added to the list of exempted goods for the manufacture of leather and textile garments, footwear and other leather articles for export.
“To rectify inversion in duty, I propose to reduce BCD, subject to conditions, on methylene diphenyl diisocyanate (MDI) for manufacture of spandex yarn from 7.5 to 5 per cent,” the FM said.
A couple of announcements raising the customs duties were also made to encourage domestic industry. The budget proposed to increase the BCD on ammonium nitrate to 10 per cent from 7.5 per cent in support of existing and new capacities in the pipeline.
Import of PVC flex banners, which are non-biodegradable and hazardous for environment and health, has been disincentivised by raising the BCD to 25 per cent from 10 per cent.