The Union Finance Minister Nirmala Sitharaman presented the full budget 2024 today before the parliament at 11 am. Underlining the Prime Minister’s vision for Viksit Bharat by 2047, FM announced a series of customs duty reforms aimed at bolstering domestic manufacturing, enhancing export competitiveness, and simplifying the taxation process.
Key Reforms and Sector-Specific Proposals:
Rationalisation of Customs Duty Rate:
Building on the reduction in customs duty rates from the 2022-23 budget, a comprehensive review of the rate structure will be conducted over the next six months. This aims to simplify trade, eliminate duty inversion, and reduce disputes.
Medicines and Medical Equipment:
Three additional medicines for cancer patients will receive full customs duty exemptions. Adjustments in the Basic Customs Duty (BCD) on x-ray tubes and flat panel detectors for medical x-ray machines will align with domestic production capabilities.
Mobile Phones and Related Parts:
To benefit consumers and stimulate domestic production and exports, the BCD on mobile phones, mobile PCBA, and mobile chargers will be reduced to 15%.
Critical Minerals:
Customs duties on 25 critical minerals will be fully exempted, with reduced BCD on two others to support industries such as nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.
Solar Energy:
The list of exempted capital goods for manufacturing solar cells and panels will expand. However, exemptions for solar glass and tinned copper interconnects will not be extended due to adequate domestic production capacity.
Marine Products:
The BCD on broodstock, polychaete worms, shrimp, and fish feed will be lowered to 5%. Additionally, various inputs for manufacturing shrimp and fish feed will be exempt from customs duty.
Leather and Textile:
The BCD on real down filling material from ducks or geese will be reduced. Goods for manufacturing leather and textile garments, footwear, and other leather articles for export will see an expanded list of exemptions. The BCD on methylene diphenyl diisocyanate (MDI) for spandex yarn manufacture will drop from 7.5% to 5%. Export duty structures on raw hides, skins, and leather will be simplified and rationalised.
Precious Metals:
Customs duties on gold and silver will be reduced to 6%, and on platinum to 6.4%, to boost domestic value addition in jewellery.
Other Metals:
The BCD on ferro nickel and blister copper will be removed. Nil BCD on ferrous scrap and nickel cathode and a concessional BCD of 2.5% on copper scrap will continue.
Electronics:
The BCD on oxygen-free copper for resistor manufacture will be eliminated, and certain parts for connector manufacture will be exempted.
Chemicals and Petrochemicals:
The BCD on ammonium nitrate will increase from 7.5% to 10% to support existing and new capacities.
Plastics:
The BCD on PVC flex banners will rise from 10% to 25% due to environmental and health concerns.
Telecommunication Equipment:
The BCD on PCBA of specified telecom equipment will increase from 10% to 15% to encourage domestic manufacturing.
The Finance Minister stressed the importance of export competitiveness. Measures to streamline customs procedures and reduce exporters’ compliance burdens will be introduced. This includes simplifying documentation and implementing more efficient electronic processing systems for export transactions, aimed at expediting processes and enhancing business ease.
The budget also proposes a unified customs duty structure to replace the current complex system of multiple rates and exemptions with a straightforward and transparent framework. This reform is expected to simplify taxation, reduce litigation, and lower compliance costs for businesses.
Specific measures to support key sectors such as electronics, textiles, and pharmaceuticals were also outlined. For example, customs duties on certain electronic components will be reduced to encourage domestic production. The textile industry will benefit from lower duties on imported machinery and raw materials, enhancing global competitiveness. Pharmaceutical manufacturers will see duty reductions on certain active pharmaceutical ingredients (APIs) and other inputs, supporting India’s vision as a leading global supplier of affordable medicines.
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