Govt mulls customs duty hike, asks ministries to consult stakeholders before submitting proposal

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In a bid to give a boost to its Atmanirbhar Bharat initiative, the government is looking at increasing customs duties and has initiated an inter-ministerial consultation. “The government has begun a fresh round of assessment of current customs duties on directions from the Prime Minister’s Office,” said a source in the government who is in the know.

“The government now wants that all key import oriented ministries should re-assess their current import duties and come up with suitable suggestions,” the source told CNBC-TV18. Ministries will hold discussions with their stakeholders over the next few days before submitting a final proposal. The final decision will be taken at the highest political level.

The list of ministries and departments contacted by the Finance Ministry’s revenue department includes pharmaceuticals, electronics and information technology, new and renewable energy, heavy industry, textiles, chemicals and fertilizers and commerce among others.

These ministries will submit a detailed list of items with an analysis on the immediate economic impact, alternatives available in India alongwith a proposal on the quantum of hike in customs duties that can be taken to reduce dependence on imports, sources said.

“The exercise is to curb imports and increase efforts towards Atmanirbhar Bharat. Normally, such an exercise is done during the pre-Budget efforts, but this time the mandate is very clear that India needs to reduce the imports and has to start manufacturing for its domestic consumption and exports,” government sources added.

The government should increase the duties with the specific intent to attract domestic and foreign investment in Indian manufacturing as well as to help it achieve scale, said Ajai Sahai,  Director General of export promotion body FIEO, said “The duties should not be increasing perpetuity but for the period for up to which scalability is achieved. It should be a balanced economic decision,” he said.

Meanwhile, government sources told CNBC-TV18 that the PMO will meet top Finance Ministry officials via video conference on July 13, to discuss the revenue position. The Fin Min will present the current status of revenue, initial trends of revenue collections and would provide suggestions to augment collections.


Meanwhile, congestion continues to remain a problem at Indian ports after India started to review Chinese imports following the violent border face-off between the two countries’ army personnel at Galwan Valley. Nine days ago, customs authorities began to clear Chinese origin consignments following a 100 percent inspection but about 20-25 days of cargo is still held up at various ports, said a source.

“Ports are overloaded with containers, consignments, couriers and parcels,” the source added. The delays have impacted pharma, electronics, mobile handset manufacturers, MSME, chemicals and fertiliser sectors. Also, Indian MSMEs have been particularly hit hard as many of them rely on value addition a process that has been pushed down further before selling goods in the Indian market, sources said.

Sector-specific associations have sent fresh representation to the finance ministry and customs authorities to speed up clearances. “We are seeing delays even now,” said Dinesh Dua, Chairman of pharma export body Pharmexcil. “Encouragingly though, we have calls from customs offices to share with them the list of stuck consignments. We are hopeful that now, consignments will start getting cleared.” Sahai of FIEO warned that the delays could impact exports as several inputs used in local production are imported.

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