Government withdraws customs duty exemptions for 350 items to boost domestic production

By

Isabelle Crossley

Published
Feb 3, 2022

In its budget for 2022- 2023, the government has withdrawn customs duty exemptions for 350 products, including wearable devices, in a bid to encourage domestic production.

The Central Board of Indirect Taxes and Customs tweeted that it has undertaken a comprehensive review of customs duty exemptions on capital goods and project imports in order to rationalise customs duty rates. The CBIC announced that it also plans to gradually phase out over 40 customs exemptions.
 
The Union Budget, which was tabled in Parliament on February 1, included the phasing out of concessional rates on capital goods and project imports and adding a tariff of 7.5%. The government chose, however, not to withdraw exemptions for machinery used in India, for example in garment production, for which components are not manufactured in the country at present, the Press Trust of India reported.

One product category for which the government decided to standardise customs duty rates is for wearable devices, hearable devices and electronic smart meters, a fast growing product category in the country. Inputs, parts, and sub-parts for wearable devices will be gradually increased. Other product categories which will see their customs duty rates change include mobile phones and other electronics. 
 
The government did chose to reduce certain customs rates including reducing the customs duty on cut and polished diamonds and gemstones from 7.5% to 5%. Moreover, simply sawn diamonds which are imported under the Kimberley Process Certification Scheme will not attract any customs duty. Imitation jewellery will attract a new basic customs duty rate of 20% or Rs 400 per kilogram, whichever is higher.