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Commerce ministry against customs duty cut in Budget 2008 news
18 February 2008

New Delhi: The commerce ministry is in favour of ''selective'' cuts on certain imported products, and is against an across-the-board cut reduction in the basic customs duty in the forthcoming Budget.
 
Commerce Minister Kamal Nath voiced the ministry's favour for reducing duties on some items on the sidelines of the annual general meeting of the FICCI, saying that the commerce ministry would like to see that the inverted duty structure in large number of areas is corrected. An inverted duty structure translates into high import duties on raw materials that are used by domestic industry, and low import duties for finished products in the same sector. This impacts the competitiveness of domestic industry, and its edge in taking on cheaper imports.

The government has been rolling back customs duties over the years, with a view to achieving the ASEAN duty levels of 4.5 to 5.5 per cent by 2010. The Finance Ministry has been rolling back import duties since the last three budgets, with duties coming down from 20 to 15 per cent in 2005-06, and to an average of 10 per cent in 2007-08.
 
Commerce minister Kamal Nath says the inverted duty structure needs to be addressed in the upcoming budget, as it adversely affects domestic industry, and India needs to operationalise key free-trade agreements with economic blocks such as the ASEAN.
 
Industry bodies such as FICCI and the CII have also been demanding that import duties should not be rolled back during the forthcoming union budget, as domestic industry is under pressure from cheap imports, mainly on account of the over 12 per cent appreciation of the rupee against the US dollar. Any broad based reduction in customs duty is widely seen to increase import volumes, and as detrimental to the interests of the domestic industry.
 
Commerce Ministry is reported to be in favour of trimming import duties on raw materials to promote domestic sectors engaged in high value addition activities in sectors such as textiles.


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Commerce ministry against customs duty cut in Budget 2008