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CII has called for an overhaul of the local testing facilities of imported items such as toys. Mint
CII has called for an overhaul of the local testing facilities of imported items such as toys. Mint

CII suggests customs duty cut on furniture in budget wish list

  • In its pre-budget memorandum, the industry body has said higher taxes were detrimental to retailers

The Confederation of Indian Industry (CII) has highlighted several points that India’s $854-billion retail trade could benefit from in its pre-budget memorandum for 2021-22.

The recommendations of the industry body put forth on Wednesday, ahead of the Union budget for FY22, include reducing customs duty on the import of furniture, overhauling local testing facilities of imported items such as toys, and enabling a pan-India return of goods in stores.

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Earlier this year, the Union government had moved to hike customs duty on imported furniture from the existing 20% to 25% to safeguard the interests of India’s micro, small and medium enterprises. The announcement was made a part of the Union Budget 2020-21.

CII’s set of recommendations said higher taxes are detrimental for most retailers as it prevents them from keeping costs low for end-consumers. “Recently we have seen that customs duty on furniture products and raw material to manufacture furniture products has been increased substantially. This has resulted in disturbance in the furniture industry. This further has resulted in inflation for the final customers," CII said.

Tariff increases result in higher prices for imports, but also reduce incentives for keeping the cost of production down. This puts a brake on making products affordable to customers, the industry body said.

CII has sought a reduction in customs duty for furniture products and raw material used to manufacture furniture and asked the government to avoid frequent changes to the rates.

This will go a long way in making India competitive to do business and make products affordable to the consumer, it said.

The Indian toy industry has also been affected by some changes in rules to enforce stricter compliance on imported toys and thus boost domestic production.

Imported toys are now subject to stringent quality checks. India’s toy traders have been seeking an extension to adhere to this. “While it’s good that we as a country are becoming increasingly aware and working on increasing the quality standards of products being sold, it should not be done without developing the relevant infrastructure in the country to verify these compliances," the industry body said.

For every imported toy, importers take samples and hand it over to customs officers for sealing and allocating the laboratory for testing. These laboratories are not all located in the city of import and the goods can be sent to any laboratory in India, making it very challenging for traders, it said.

CII has asked the Centre to first develop a testing lab infrastructure near major Indian ports. “Implement such changes only after the necessary infrastructure is in place. Permit importers who are authorized economic operators to get sampling done from the container after receipt at their warehouse to send to laboratories under importer self- declaration as existing. This will reduce handling at port." It also sought an extension to adhere to quality control order on toys to be applicable by June 2021.

The steps will effectively reduce handling of cargo at ports that lead to damages and delays, it said.

The industry body on behalf of the retail industry is also eyeing an extension of the proposed e-invoicing applicable from 1 October for assessees having a total turnover exceeding 500 crore during the previous financial years.

Companies are struggling on manpower and facing financial hardship because of covid-19, CII said. It has thus sought the e-invoicing system to be deferred till 1 April 2021. “The new scheme, which is easier for compliance, needs to be rolled out for easier implementation and compliance. The current scheme of e-invoicing would put financial and compliance stress on the business already struggling because of covid-19," it said.

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