India: Self-reliance push: Duties hiked, ‘old exemptions’ to be reviewed

  • Keeping in line with the government’s push for a more self-reliant India, the Union Budget on 1 Feb 21 focussed on boosting domestic production in a variety of key sectors by hiking customs duties on final goods, bringing down costs of imported raw materials and reviewing “old exemptions”.
  • The government has reduced duties on raw materials and inputs used by domestic manufacturers across eight industries, including petrochemicals, textiles, metals and aviation, as a measure to “correct” inverted duty structures.
  • At the same time, not all raw materials have seen a drop in duties, with the government hiking the rates of certain input materials across sectors like agriculture, chemicals, gems and jewellery, capital goods and auto.
  • This is to create a “level playing field” for the benefit of farmers, MSMEs and other domestic manufacturers, according to the government.
  • “Our custom duty policy should have the twin objective of promoting domestic manufacturing and helping India get onto (the) global value chain and export better. The thrust now has to be on easy access to raw materials and exports of value added products,” said Finance Minister Nirmala Sitharaman while delivering her Budget speech at the Lok Sabha.

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