New Delhi: Imports of several commodities into the country became cheaper with the government reducing the peak rate of basic customs duty on non-agricultural products from 12.5% to 10%.
The government had reduced the duty from 15% to 12.5% last year as part of itseffort to achieve parity with the duty structure in South East Asian countries.
Revenue from customs duties is expected to improve to Rs81,015 crore in 2006-07 from Rs76,324 crore in the previous fiscal. The government expects the figure to climb to Rs94,620 crore in 2007-08.
However, domestic manufacturers in some sectors have begun to worry at the possible impact of the reduction. “Reduction of customs duty on commercial vehicles from 12.5% to 10% is going to affect the (automobile) industry negatively, specially as this applies to used commercial vehicles also,” said Madhur Bajaj, president of Society of Indian Automobile Manufacturers, an industry body.
“This would open up imports from low cost economies,” Bajaj said.
The ad valorem customs duty on textiles, fabrics and garments has also been reduced from 12.5% to 10%. There is however, no change in the specific component of customs duty.
All forms of coking coal have been declared fully exempt from duty. Edible oils and crude as well as refined oil have been exempted from additional customs duty of 4%. Roasted molybdenum ore and concentrate too has been exempt from the additional four per cent customs duty.
The exemption for cellphone parts and components and accessories on additional duty of customs at 4% has been extended till June 2009. Customs duty on metals and their inputs has been reduced from 20% to 10% on seconds and defectives of iron and steel.
The customs duty on food processing machinery has been dropped from 7.5% to 5%.
The gems and jewellery industry, too, stands to gain as customs duty on cut and polished diamonds has been reduced from 5% to 3%. Customs duty on rough synthetic gemstones has been reduced from 12.5% to 5%.