Government seeks to bolster indigenous production through customs reforms in its 5th Union Budget
There is no doubt that the Government has yet again left no stones unturned in exuding its developmental agenda in its 5th Union Budget that was passed yesterday.
Since its first budget in 2014, the government has sought to augment the level of ease of doing business by giving a wide elbow room for foreign investments.
In its 5th and arguably most decisive budget, the government has yet again acted as a trade facilitator and a non-conformist by introducing certain radical changes in respect of global trade and commerce. Seemingly, post India's participation at the World Economic Forum, the government has laid even more focus on removing hindrances for moving goods across borders, something that has been slow-paced till date. However, some of the noteworthy reforms that have been brought in by the government in this year budget in respect of customs duties seem to project its protectionist stance.
Some of the key customs reforms that will have an effect on export-import trade in the current fiscal year are as follows:
- The government has given the biggest surprise by taking a radical step of abolishing the Education Cess and Senior Higher Education Cess (SHEC) on all imported goods. The same has been replaced by a Social Welfare Surcharge, as to cut back on the propagation costs and use the same on various Social Welfare Schemes of government. This will result in 7% hike in aggregate custom duties on imports (excluding petrol, diesel, silver, gold and mobile phones).
- On mobile phones, the customs duty has been hiked to 20% from earlier 15%. This will nonetheless, increase the prices of imported headsets such as Android and iOs by 4%, according to market experts.
- Similarly, the customs duty in case of TVs and other electronic items has been doubled to 15%. This will also impact in rising cost of imported electronic gadgets.
- The government has, however, decreased custom duty to 5% in cashews.
- The customs duty has been hiked in the case of import of certain automobiles and their components. For instance, it has been raised from 10-15% in case of radial tyres that are used in trucks and buses. Similarly, there will be a rise in import duty from 7.5%-15% in case of some “specified” auto components, such as engine, suspension brakes, transmission parts, gearboxes, airbags etc.
- The rate of customs duty on imported CBUs (completely built units) of large commercial vehicles (LCVs) and passenger vehicles has been raised from 20% to 25%. Such vehicles are imported via sea-route, e.g. cars like Audi, Lamborghini, and Ferrari etc.
- In order to tap the potential in the food processing industry, the government has substantially hiked customs duty in the import of several food items. For instance, it has been raised 500% in case of cranberry juice to 50%, and for all other fruit and vegetable juices, it has been raised from 30-50%.
- Customs duty on wrist watches, smartwatches and other wearable devices, goggles, and footwear has been doubled from current 10% to 20%. Evidently, this won't have much effect as these are elite goods, and the buyers have enough money to spend on them.
- The market for diamond jewelry and gemstones will see a hike from 2.5% to 5%.
Such drastic moves can never be envisioned as an inward-looking policy, as these are indeed intended to accelerate the pace of ‘Make in India’ initiative and boost indigenous manufacturing.
No wonder, these will eventually bolster the exports and assist the small traders to excel in the global market. The budding entrepreneurs can derive the utmost benefit of these policy measures, by applying for Import Export Code Registration and ushering their entity into the global market.
If you need any assistance with IEC Registration online or you wish to know more about Import Exports code, feel free to contact us at 8881-069-069.