Union Finance Minister Nirmala Sitharaman stated on Tuesday that the plans to lower customs taxes will uphold local value addition, encourage export competitiveness, boost domestic manufacturing, and streamline taxation while maintaining the interests of the general public and consumers.
Proposed are new customs tax rates on goods ranging from rare earth minerals and mobile phones to life-saving medications.
Over the course of the following six months, a thorough assessment of the customs duty rate structure will be conducted in order to rationalize and simplify it for the purpose of facilitating commerce, eliminating duty inversion, and minimizing conflicts.
To promote domestic value addition in gold and precious metal jewelry within the nation, customs tariffs on gold and silver have been lowered from 15% to 6%, and on platinum, from 15.4% to 6.4%.
In order to lower the cost of producing steel and copper, basic customs tax (BCD) on ferro nickel and blister copper has also been eliminated.
Reducing customs tariffs on precious metals, such as gold, silver, and platinum, to promote local value addition in the jewelry manufacturing industry, according to Ankur Gupta, Practice Leader, Indirect Tax at SW India, is another important step.
“By lowering the cost of raw materials, this measure is anticipated to support the jewelry industry, thereby promoting local craftsmanship and export growth,” Gupta continued.
According to the Finance Minister, during the past six years, there has been a nearly 100-fold growth in mobile phone exports and a three-fold increase in domestic mobile phone production.
During the Union Budget 2024–25 presentation in Parliament, the Minister stated, “I now propose to reduce the BCD on mobile phones, mobile PCBA, and mobile chargers to 15% in the interest of consumers.”
In addition, the Finance Minister reduced BCD on two essential minerals and declared a complete exemption from customs taxes on 25 other minerals.
This will help industries that depend on rare earth minerals, such as space, defense, telecommunications, high-tech gadgets, nuclear energy, and renewable energy.
The minister announced the extension of the list of exempt capital items for use in the domestic production of solar cells and panels, which would further stimulate the renewable energy industry.
The Finance Minister said, “Furthermore, given the adequate domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them.”
In order to improve the competitiveness of the nation’s seafood exports, the Minister suggested lowering the BCD to 5% for certain broodstock, polychaete worms, shrimp, and fish feed.
In addition, to further increase seafood exports, a number of materials used in the production of shrimp and fish feed are free from customs duties.
To improve export competitiveness in the leather and textile industries, similar discounts and exemptions are also offered for other raw materials used in the production of leather goods. Additionally, a simplification and rationalization of the export tariff system on raw hides, skins, and leather is suggested.
