Budget 2023-24: Customs duty rejig to boost domestic manufacturing

As many as 14 items have seen a jump in import duty to tackle the issue of cheap quality imports of items such as toys

Exports, global exports, supply chain
Photo: Bloomberg
Shreya Nandi New Delhi
3 min read Last Updated : Feb 02 2023 | 12:32 AM IST
Finance minister Nirmala Sitharaman on Wednesday tweaked the basic Customs duty of 32 items, with the aim to increase domestic manufacturing and enhance value addition.

Rationalisation and simplification of taxes are expected to boost exports.

As many as 14 items have seen a jump in import duty to tackle the issue of cheap imports of items such as toys.

On the other hand, duties have been hiked to encourage local production and value addition in case of mid-range-to-premium automobiles, including electric vehicles (EVs).

Demerit goods such as cigarettes are also expected to become costly.

National Calamity Contingent Duty (NCCD) on specified cigarettes was last revised three years ago and has now been revised upwards by about 16 per cent.

“A simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration.

I propose to reduce the number of basic Customs duty rates on goods, other than textiles and agriculture, from 21 to 13.

As a result, there are minor changes in the basic Customs duties, cesses and surcharges on some items, including toys, bicycles, automobiles and naphtha,” Sitharaman said during the Budget.

The changes in the duty will come into effect from Thursday.

According to the Budget document, the revised estimate of revenue from Customs duty is Rs 2.1 trillion. FY24 will see an 11 per cent jump in revenue at Rs 2.33 trillion.

To provide impetus to green mobility, Customs duty exemption has been extended to import of capital goods and machinery required to manufacture lithium-ion cells for batteries used in EVs.

The Global Trade Research Initiative (GTRI) warned that continuing concessional import duty will delay investments in local cell manufacturing.



“Firms will happily import cells and add less than 10 per cent value to make batteries for use in EVs. Our EV dreams should not increase imports or strengthen China,” it said. 

Customs duty on articles of precious metals such as gold, silver and platinum has been increased from 20 per cent to 25 per cent, thereby increasing the duty differential to 10 per cent over gold, silver, platinum bars.

This will boost domestic manufacturing in the sector and result in import substitution.

Customs duty on imitation jewellery has been enhanced from 20 per cent to 25 per cent, to discourage cheap imports from China.

A reduction of duty on lab-grown diamond (LGD) seeds from 5 per cent to nil will result in reducing the cost of production.

It will make LGD exports globally competitive, the department of commerce said in a statement.

The reduction in import duty of fish meal from 15 per cent to 5 per cent will boost exports. 

Import duty on compound rubber was increased from 10 per cent to 25 per cent.

“This will reduce the import of compound rubber into the country and boost demand and prices of natural rubber produced in the country. This will go a long way in supporting our natural rubber farmers and further increase production in the country,” it said.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Customs dutyBudget 2023ExportsImport duty

Next Story