Team Blitz India
HIGHER import duties on inputs than on finished products for over a dozen items and the resultant inverted duty structure has been highlighted by the Ministry of Commerce and Industry to the Finance Ministry with a request to address the issue in the forthcoming Union Budget for 2024-25.
Despite steps taken in past Budgets to address the problem, the sectors which are still affected due to the inverted duty structure include textiles, engineering goods and leather.
One of the reasons behind inverted duty structure in some sectors is the Free Trade Agreement (FTA) signed by India with partner countries. The industry, in the past, has complained about the FTA with Asean in particular which has resulted in a situation where the finished product is imported dutyfree, because of duty elimination under the pact, while import taxes on intermediates continue.
Inverted duty structure goes against the Government’s emphasis on ‘Make in India’ as it encourages the import of finished products rather than raw materials by imposing a higher import duty on the latter.
“The Commerce & Industry Ministry always shares such list of goods, where customs duties on components are higher than finished products.
We have given our inputs to the Finance Ministry on the inverted structures. It is a list of about 13-14 products. They will look at it in the context of Budget discussions,” according to Ministry officials.
As inverted duty structures are not economically efficient, the Ministry is hopeful that the Budget would address it, they add. The Union Budget for 2024-25 is likely to be presented on February 1, 2024.
