FM rejigs import tariffs to boost local manufacturing

Changes in customs duties will benefit sectors such as gems and jewellery, textiles, leather and footwear and shipping

- Rajeev Jayaswal

Finance minister Nirmala Sitharaman announced extensive changes in import tariffs, simplifying the rate structure mainly to reduce input costs for domestic manufacturing so as to make Indian products globally competitive and boost the country's economy. Exports was one of the Union Budget's four identified engines of growth.

The government has also reviewed tariffs in a calibrated manner so that critical inputs for energy transition and essential items such as life-saving medicines become cheaper.

According to experts, the changes in import tariffs will benefit labour-intensive sectors such as gem and jewellery, textiles, leather and footwear and shipping. The budget also reviewed tariffs in sunrise sectors such as electronics and electrical vehicles (EVs).

"My proposals relating to customs aim to rationalise (the) tariff structure and address duty inversion. These will also support domestic manufacturing and value addition, promote exports, facilitate trade and provide relief to common people," Sitharaman said in her budget speech on Saturday.

Sticking to her budget promise in July 2024 to undertake a comprehensive review of import tariffs, she proposed to remove seven tariff rates for industrial goods over and above the seven that were removed in the budget of FY24. That leaves only eight tariff rates, including the zero rate. The budget also proposed to levy not more than one cess or surcharge. This will exempt social welfare surcharge (SWS) on 82 tariff lines that currently also attract a cess.