Relief to local firms: Duties stay stable

BS Reporter /  July 07, 2009, 4:17 IST

Peak rate unchanged at 10%

In order to provide a stable import duty framework to industry, Finance Minister Pranab Mukherjee has tried to maintain the overall rate structure for customs duties, as well as for central excise and service tax. The government was expected to reduce the peak customs duty from 10 to 5 per cent, but deferred the move to resuscitate the domestic industry, reeling under the global economic downturn.

In a move that would benefit the end-consumer, the customs duty on 10 specified life saving drugs, vaccines and their bulk drugs has been reduced from 10 per cent to 5 per cent. The duty on specified heart devices like artificial heart has been reduced from 7.5 per cent to 5 per cent.

The customs duty on liquid crystal display, or LCD, television sets has been reduced from 10 per cent to 5 per cent, while the customs duty exemption on set-top boxes for television broadcasting has been withdrawn and, instead, 5 per cent customs duty has been imposed.

According to R Muralidharan, executive-director with consultancy firm PricewaterhouseCoopers, the finance minister has not disturbed the peak customs duty rate, which would give breathing space to the domestic industry. For instance, the withdrawal of exemption on set-top boxes would help the domestic manufacturers, which have been hit by the global crisis.

The government, to promote use of new and renewable energy sources of power, has reduced the customs duty from 7.5 per cent to 5 per cent on permanent magnets for generators above 500 Kw used in wind-operated electricity generators. The duty on bio-diesel has been reduced from 7.5 per cent to 2.5 per cent.

To revive the export sector, five additional items have been included in the list having specified raw materials or inputs (fully exempt from customs duty), which are imported by manufacturers and exporters of sports goods.