Customs & excise duty tweaks seen to help local makers of LED lights, RO water purifiers

In a bid to promote domestic manufacturing, the government has tweaked customs and excise duty rates on components used for making LED lights, RO water purifiers and other renewable energy products.

However, this is expected to prove to be a mixed bag for industry players, as it will raise costs for companies who depend on imports.

In a bid to boost local LED companies, custom duties on components have been reduced to promote domestic value additions. The government has reduced the basic custom duty on all parts used to manufacture LED luminaries and drivers to 5 per cent from the current 10 per cent.

However, on imports of semi-finished LED parts — that include driver assembly and other such products — a basic custom duty of 5 per cent will now be levied. These semi-finished inputs earlier attracted zero custom duty.

“This will make the products of those manufacturers who assemble LEDs in India cheaper, whereas those who import semi-finished products will witness an increase in costs,” a statement from the Ministry of Power clarified on Thursday. At the same time, excise duty on all parts for use in the manufacture of LED lights or fixtures has been reduced to 6 per cent to promote domestic manufacturing.

Saurabh Kumar, Managing Director, Energy Efficiency Services Ltd, said the changes will help correct the existing inverted duty structure. It is consistent with the government’s move to promote assembling and manufacturing in India, he added.

In the case of RO water purifiers, the government has the increased basic custom duty on the RO membrane element used in household filters from 7.5 per cent to 10 per cent.

The membrane is an essential part, and most of the large organised manufacturers make it locally. However, the unorganised and trading companies import it. These players may need to increase their product prices.

At the same time, the government has decreased the CVD and excise duty on membrane sheet and spacer/tricot used to manufacture the RO membrane element for household water purifiers from 12.5 per cent to 6 per cent.

Mahesh Gupta, Chairman, Kent RO Systems, said: “These steps will help domestic manufactures like us and are in the spirit of ‘Make in India’. They will also help in correcting the inverted duty structure and incentivise domestic value-addition.”