Blitz Bureau
NEW DELHI : In a significant move aimed at boosting domestic manufacturing, the Indian Government is considering proposals to reduce customs duties on various inputs, particularly those used in labor-intensive sectors such as textiles, apparels, gems and jewelry, leather goods, electronics, steel, and chemicals. This initiative is part of a broader strategy to make Indian products more competitive in the global market.
Sources familiar with the development indicate that these reductions will likely be featured in the upcoming budget on July 23. The Government is also contemplating raising import duties on certain finished goods, including specific medical devices like dental equipment and blood pressure meters. The rationale behind this is to promote the Made in India initiative by encouraging local production.
A Government official involved in the process noted that the proposed changes to customs duties are not driven by revenue considerations. Instead, they aim to protect domestic industries from an influx of cheaper imports and reduce the cost of imported inputs. The ultimate goal is to enhance the global competitiveness of Indian manufacturers.
One of the key principles guiding these changes is the removal of duty inversion. This occurs when raw materials attract higher duties than finished products, discouraging local manufacturing. The official emphasized that correcting this inversion is crucial to prevent the dumping of finished goods, particularly from countries like China, which harms Indian industries.
Free trade agreements (FTAs) have also contributed to duty anomalies, as they allow zero-duty access to foreign products while maintaining higher duties on inputs and components needed for local manufacturing. This discrepancy makes Indian products less competitive. Addressing these anomalies is essential for ensuring that local goods can effectively compete with imported items.
