The budget of 2019-20 has proposed a significant rejig in basic customs duties to encourage manufacturing in the country. This involves raising customs duties on a number of products, withdrawing exemption from some and lowering rates for others to encourage value addition.
“The main aim is to emerge as an attractive investment destination for companies looking to diversify manufacturing operations from China.”
With “Make in India” and “becoming a USD 5 Trillion economy” as the goals, finance & commerce ministries of India are always on a lookout for relaxing duties/taxes, which transpires into making India a manufacturing hub. The budget of 2019-20, proposed changes in basic customs duties to encourage manufacturing in the country. This involves raising customs duties on several products, withdrawing exemptions from some, and lowering rates for others to encourage value addition.
What it means for selling in India?
The target of “Make in India” can only achievable if India becomes an attractive investment destination for companies that are looking to diversify manufacturing operations from China to other destinations.
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If that be the intent of foreign investors, then “Why not India?” is the default understanding of Indian polity. Further, such a move also intends to protect domestic producers who face a challenge from China’s might in India and globally.
In the recent budget, there is a proposed increase of duty on items ranging from stainless steel to CCTV cameras to outdoor units of split air-conditioners. In another case, The Honourable Finance Minister Nirmala Sitharaman announced a waiver of customs duty for nuclear power and parts required for building eight indigenous atomic energy plants as the country eyes a bigger space in the sector. The defense sector also has an exemption, but it’s limited to goods not manufactured in India.
Indian Cellular and Mobile Phone association are excited about the removal of basic customs duty on capital goods for the manufacturing of parts and components as it will improve the competitiveness of mobile phones in India and also will make India a global destination for mobile phone manufacturing. Capital items and raw materials imported for the manufacturing of components & devices related to mobile/cellular phones are proposed for duty exemption by the Government of India. These items can only be imported in India if the end-use (finished goods from the raw and capital goods) as mentioned in column number ‘3’ of the table (Refer Annexure-1), is being followed. The importer needs to claim the duty exemption and on satisfying the conditions, as sought by the appraising officer.
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