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Union Budget 2019: Duty tweaks to boost local companies

The removal of basic customs duty on capital goods for manufacturing of parts and components will reduce capital cost by seven per cent and improve competitiveness.

Published: 06th July 2019 01:55 AM  |   Last Updated: 06th July 2019 04:40 PM   |  A+A-

Union Finance Minister Nirmala Sitharaman presents the Union Budget 2019-20 in the Lok Sabha at Parliament in New Delhi.

Union Finance Minister Nirmala Sitharaman presents the Union Budget 2019-20 in the Lok Sabha at Parliament in New Delhi. (Photo | PTI)

Express News Service

NEW DELHI: Giving a boost to the ‘Make in India’ mission, the government has proposed reducing duties on certain raw materials and capital goods, and increasing customs duty on a series of products in order to provide the domestic industry a level playing field.

In her maiden speech, Finance Minister Nirmala Sitharaman proposed increasing custom duty on CCTV camera, IP camera, digital video recorder and network video recorder to 20 per cent from 15 per cent. She also proposed hiking basic customs duty on optical fibres, optical fibre bundles and cables to 15 per cent from 10 per cent. On the other hand, the government waived import duty on capital goods, electronic goods such as camera module and mobile phone charger, lithium-ion cell, display module, set-top box, cathode ray tubes (picture tube), CD, DVD, colour television, plasma display etc to further promote domestic manufacturing.

"On the Customs side my proposals are driven with the objectives of securing our borders, achieving higher domestic value addition through make in India, reducing import dependence, " said the finance minister.

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According to India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo,the removal of basic customs duty on capital goods for manufacturing of parts and components will reduce capital cost by seven per cent and improve competitiveness. “Such steps will also lead towards making India the most competitive nation in mobile phone manufacturing ecosystem and will eventually reduce the cost for consumers."

“Reduction in customs duty on lithium-ion cells would help local component manufacturers in scaling up the production thereby further reducing the overall upfront cost of electric vehicles in India,” noted Naveen Munjal, Managing Director of Hero Electric.

Furthermore, to encourage domestic publishing and printing industry, a five per cent customs duty has been imposed on imported books. It has also proposed hiking customs duty on the indoor and outdoor unit of split system air conditioner to 20 per cent from the present 10 per cent to promote domestic manufacturing. However, import of defence equipment that India does not make has been exempted from customs duty.

While outdoor units have by and large been indigenised, indoor units are yet to achieve the same degree of localisation, which will now be boosted," CEAMA president Kamal Nandi said. The prices of split AC, however, are likely to increase around eight per cent, as the government has proposed to double customs duty on the indoor and outdoor unit. 

The government also revived its efforts to attract high-tech companies for setting up manufacturing units in India in areas like electronic chip manufacturing, laptop etc with a promise of direct and indirect tax incentives. "Government will launch a scheme to invite global companies through transparent bidding to set up mega manufacturing plants in sunrise and advanced technology areas such as semiconductor fabrication," Sitharaman said, adding that the government will strive to achieve the "cherished goals" of self reliance thereby giving further boost to Indian industries.

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