Nifty23,727.65-25.8

English EditionEnglish Editionहिन्दी ગુજરાતી मराठी বাংলা ಕನ್ನಡ മലയാളം தமிழ்తెలుగు

| Today's ePaper

My Watchlist

Union Budget 2025: Sitharaman may introduce a new customs playbook; tweaks to turn tariffs into treasure

SECTIONS

ET OnlineLast Updated: Dec 24, 2024, 03:38:00 PM IST

Font Size

Save

Comment

Synopsis

Budget 2025: India is considering removing customs duty exemptions on certain imported components to boost local manufacturing. The finance ministry is reviewing planned investments and domestic production capabilities across various sectors. Inputs from industry are sought, focusing on promoting the 'Make in India' initiative and assessing impacts on MSMEs and global value chains.

Budget Delights: 30 stocks poised to benefit from FM Sitharaman's announcements — FM Nirmala Sitharaman will present Budget in February

The finance ministry is considering eliminating customs duty exemptions on several imported components in the upcoming budget to enhance local manufacturing, reported ET Bureau on December 24, 2024.

ET Year-end Special Reads

It's all Gucci for Indians' luxury craving even as economy shows wrinkles

Investing in 2025: Will domestic funds continue to counter FPI sell-offs amid rising valuations?

2024 exposed the underbelly of India's Silicon Valley

As per the report, these components include bulk drugs used in insulin production, raw materials for lab-grown diamonds, plastics for optical fibre, LED and LCD TV panel parts, and equipment for coal mining and power generation.

Also Read: Budget 2025: Date, time & other key details announced; here's what makes it a special day for markets

The Ministry of Finance is reviewing 31 products where conditional customs duty rates, currently at 0-5%, and exemptions are set to expire by September 2025. Relevant ministries and industry stakeholders have been consulted to evaluate planned investments, domestic production, and capacity.

An official noted, “The review process is underway to decide whether these exemptions should continue or lapse. Inputs from the industry have been sought.”

Tweaks to turn tariffs into treasure?

The move aligns with the government’s broader strategy to phase out conditional exemptions, part of its “Make in India” initiative to boost the domestic industry and increase India’s share in global value chains.

Also Read: Budget 2025: Nirmala Sitharaman holds meet with states; Punjab and Kerala seek special financial packages

In previous budgets, customs duties on ferro nickel and blister copper were removed to reduce steel and copper production costs, while duties on X-ray tubes and flat panel detectors for medical X-ray machines were lowered under the Phased Manufacturing Programme for medical devices.

Key sectors under review include life-saving medicines, chemicals for telecom-grade optical fibres, and components for renewable energy and transport. Experts highlight the need for a balanced approach, particularly for goods crucial to MSMEs. "The government will assess the impact on 'Make in India,' focusing on value addition within the country," said Pratik Jain, partner, PwC India.

Geopolitical dynamics are also influencing the review, especially concerning imports from the US. Bipin Sapra, partner at EY, stated, “Phasing out conditional customs notifications will support local industries in manufacturing products currently imported. Industries have had time to prepare for this transition.”

However, certain concessions might remain where imports do not threaten domestic production. A representative from the textile industry remarked, “Concessional duties can be allowed as long as imports do not harm local production.”

The review is expected to refine India’s trade policies, ensuring they align with the country’s manufacturing goals while safeguarding crucial sectors.

(With inputs from ET Bureau)

Nominations for ET MSME Awards are now open. The last day to apply is December 31, 2024. Click here to submit your entry for any one or more of the 22 categories and stand a chance to win a prestigious award.

(You can now subscribe to our Economic Times WhatsApp channel)