Budget 2021: FM proposes several changes to customs duties to boost local manufacturing
Presenting the Union Budget 2021, Finance Minister Nirmala Sitharaman explained that since last year, the government is overhauling the structure of customs duties and has eliminated 80 outdated exemptions.
Presenting one of the most-awaited Budgets in Indian history, Finance Minister Nirmala Sitharaman on Monday announced a slew of changes in customs duties in a bid to boost local manufacturing. She explained that since last year, the government is overhauling the structure of customs duties and has eliminated 80 outdated exemptions.
Proposing to review more than 400 old exemptions this year, Sitharaman promised to put in place a revised customs duty structure, which is free of distortions.
MSMEs, which were severely hit by a sharp rise in iron and steel prices, will see customs duty reduced uniformly to 7.5 percent on semis, flat, and long products of non-alloy, alloy, and stainless steels. To provide relief to metal re-cyclers, which are mostly MSMEs, Sitharaman announced exemption duty on steel scrap for a period up to March 31, 2022.
"I am also revoking ADD (Anti-Dumping Duty) and CVD (Countervailing Duty) on certain steel products. To provide relief to copper recyclers, I am reducing duty on copper scrap from 5 percent to 2.5 percent," she said.
FM Nirmala Sitharaman
For the chemicals sector, Sitharaman reduced customs duty on Naptha to 2.5 percent. For capital equipment and auto parts, she proposed to withdraw exemptions on tunnel boring machines, and said they will attract a customs duty of 7.5 percent; and its parts a duty of 2.5 percent.
"We are raising customs duty on certain auto parts to 15 percent to bring them on par with a general rate on auto parts. Further, we are increasing duty from 10 percent to 15 percent on steel screws and plastic builder wares," she said.
The Union Budget 2021 also proposed the exemption on import of duty-free items as an incentive to exporters of 36 garments, leather, and handicraft items.
"Almost all these items are made domestically by our MSMEs. We are withdrawing exemption on imports of certain kinds of leathers as they are domestically produced in good quantity and quality, mostly by MSMEs. We are also raising customs duty on finished synthetic gemstones to encourage their domestic processing," Sitharaman explained.
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Edited by Megha Reddy