New Delhi: Considering that imports have become cheaper due to rise in rupee value, the Budget 2008-09 has proposed to keep peak customs duty rate unchanged at 10%.
“Since April 2007, the rupee has appreciated against the dollar by 9.8%. Consequently, the case for reducing the peak rate at this stage is very weak,” Finance Minister P Chidambaram said while proposing no change in the peak rate of customs duty on non-agriculture products in the General Budget for 2008-09, presented in Parliament.
The peak rate for non-agricultural products was 20% in January 2004. Analysts said had there been not such a huge rupee appreciation, a cut in customs duty to the ASEAN level would have been possible.
However, the Finance Minister did announce a cut in customs duty in certain sectors to “provide a fillip to that industry or to promote value addition or to remove inversion or any other anomaly.”
In this respect, Chidambaram proposed a cut in customs duty on project imports from 7.5% to 5%.
However, he also proposed 4% special countervailing duty on a few projects in the power sector.
The Finance Minister also withdrew duty on steel melting scrap and aluminium scrap from the current 5% to “improve the supply of raw material”.
Life-saving drugs and bulk drugs used for manufacture of such drugs will attract lower customs duty of 5% against 10% at present.
The Finance Minister also cut customs duty on specified parts of set-top-boxes, convergence products, specified machinery and raw materials for sports goods and certain raw materials for gems and jewellery and certain cattle feeds.