Duty sops to boost local manufacture of EVs, phones, TVs
The budget extended customs duty exemption to imports of capital goods and machinery used to make lithium-ion cells for EV batteries
Mumbai: The Union budget pledged strong support for domestic manufacturing of electric vehicle batteries, mobile phones and televisions, with Union finance minister Nirmala Sitharaman cutting basic customs duty on several components and machinery used in their manufacturing.
The budget extended customs duty exemption to imports of capital goods and machinery used to make lithium-ion cells for EV batteries. In order to deepen domestic value addition in mobile phone making, it also proposed to provide duty relief on import of certain parts and inputs like camera lens, and continue the concessional duty on lithium-ion cells for for another year.
Similarly, to promote value addition in the manufacture of televisions, the budget proposed to reduce the basic customs duty on parts of open cells of TV panels to 2.5%.
“The budget proposed alignments on duties applicable to imports to support the Make in India and Atmanirbhar Bharat initiatives like customs duty relaxations on camera lens, parts of camera modules, parts for manufacture of open cell of TV panel and some others. It has also prioritized green growth by extending customs duty exemptions on capital goods used in manufacturing of lithium-ion cells for batteries used in EVs and denatured ethyl alcohol,” said Santosh Dalvi, partner and deputy head of indirect tax, KPMG in India.
Sunil Nayyar, managing director, Sony India said that the budget should propel more demand and consumer spending across various sectors, especially with more disposable income in consumers’ hands thanks to tax benefits.
“The newly announced reduction in basic customs duty for several television component imports is a big boost for the television industry. We welcome this budget in its entirety and we are optimistic of our future business plans in India,” he added.
The finance minister added that she will reduce the number of basic customs duty rates on goods other than textiles and agriculture, from 21 to 13.
“As a result, there are minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha. A simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration,” said Sitharaman.
MSMEs and industries will gain from the reduction in customs duties, said Amit Pamnani, chief investment officer, Swastika Investmart Ltd. “Sectors like metals, ship, seeds, chemicals, crude, glycerine, mobile phones, camera lens, TV, toys, bicycles, and automobiles will get direct augmentation in profits,” Pamnani added.
The finance minister announced tax relief for many other sectors as well, including exempting excise duty on GST-paid compressed bio gas contained in blended compressed natural gas.
To rectify inversion of duty structure and encourage manufacturing of electric kitchen chimneys, the basic customs duty on electric kitchen chimney has been increased from 7.5% to 15%, and that on heat coils for these is proposed to be reduced from 20% to 15%.
“Denatured ethyl alcohol is used in chemical industry. I propose to exempt basic customs duty on it. This will also support the Ethanol Blending Programme and facilitate our endeavour for energy transition. Basic customs duty is also being reduced on acid grade fluorspar from 5 per cent to 2.5 per cent to make the domestic fluorochemicals industry competitive. Further, the basic customs duty on crude glycerin for use in manufacture of epicholorhydrin is proposed to be reduced from 7.5% to 2.5%,” Sitharaman added.
The basic customs duty exemption on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode will continue, as the government aims to facilitate availability of raw materials for the steel sector.
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First Published:2 Feb 2023, 12:16 AM IST
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