This time the budget focussed the rearrangement mainly on electronic gadgets, renewable energy textiles, iron and steel, chemicals, furniture raw materials, copper scrap, certain chemicals, telecom equipment, and rubber products, to promote domestic manufacturing and exports, auto parts, and products manufactured by MSME to promote domestic manufacturing. The budget was released by finance minister Nirmala Sitharaman on FEBRUARY 1.
To lend a supporting hand towards domestic manufacturing India made changes in the budget for 2021-22 and the rearrangement was focused on particular areas such as electronic gadgets, renewable energy textiles, iron and steel, chemicals, furniture raw materials, copper pieces, certain chemicals, telecom tools, and rubber products, to promote domestic manufacturing and exports, auto parts, and products manufactured by MSME. The new Budget made in Inda for 2021-22 has unveiled a significant rearrangement in basic customs duties to promote domestic manufacturing in our country and help our country become part of the global value chain. The recently released budget states “MARCH 31 would be the last date of authorization for any new customs duties”.
The government is now considering reducing the taxes of coal tar pitch and copper scrap and increasing the rates of luxurious or finished goods such as certain finished goods like refrigerators, washing machines, and clothes dryers.
Beneficiary steps are been taken by the government to promote manufacturing in our country:
Launching of production-linked incentives scheme (PLI) for various sectors which include ACs and LED lights.
In another important development statement, the Central government has introduced the Agriculture Infrastructure and Development on a few items. According to finance minister Nirmala Sitharaman, this will help improve the agricultural infrastructure and increase the remuneration for farmers. Agriculture Infrastructure and Development Cess (AIDC) has been suggested on petrol and diesel. It will Rs.2.5 per liter on petrol and Rs.4 per liter on diesel.
Finance Minister Nirmala Sitharaman says the Part A of the Budget will lay on the vision for Atmanirbhar or a Self-reliant nation that promotes domestic manufacturing. The minister says the vision of the budget’s part A outlines 3 points, the first one being health and well-being. We will broadly focus on three areas: preventive, curative, and wellbeing.
Finance minister Ms. Sitharaman quoted Rabindranath Tagore’s statement: “Faith is the bird that feels the light when the dawn is still dark”. She also said that our country has faced an economic crisis thrice and this time this was due to a global pandemic.
Customs duty rates for dozens of items, like safety glasses, parts of the signaling equipment, brakes, and ignition wire sets have been raised to 15 % from 10 % in the automobile sector.
Import of a vast number of items in the agriculture sector, fabrics, gems and jewelry, plastics, chemicals, and leather has been made unattractive by putting heavy duties on them.
The increment in rates, effective from the next day of releasing the budget i.e. 1 FEBRUARY, are calculated to restrain import of auto components and agriculture-produce. In sectors like electronics, they may lead to further price increment in the coming months as the government has also stated that it is also considering increasing the price of finished goods or luxurious goods like washing machine, cloth dryers, refrigerators, and air conditioners, etc. while reducing the taxes or levies on copper scrap by 5 percent and coal tar pitch.
Customs duty or taxes, laid on compressors which are used in refrigerators and air conditioners, have also been increased but it will have little effect on the price, said B. Thiagarajan, managing director, Blue Star.
A vast number of agricultural produces have been made costlier to import. Apples, maize bran, peas, Kabuli chana, Bengal gram, lentils, crude edible oils for example palm, soybean and sunflower, and fish feed will attract lower duties.
The customs duty on electrical appliances like fans, food grinders/mixers, shavers, water heaters, ovens, toasters, coffee makers, heaters, and iron as also on stationery items like filing cabinets and paper trays have been doubled from 10 to 20 percent. Duty on compressors of refrigerators and air conditioners has been increased to 12.5 percent from 10 percent, on railway carriage fans from 7.5 to 10 percent, on commercial freezers from 7.5 percent to 15 percent, and welding and plasma cutting machines from 7.5 percent to 10 percent. March 31 would be the last date of Any new customs duty exemption and it will have validity up to the following two years from the date of its issue the budget stated.
In the Make in India initiative taken by the Indian government, customs duty rates or taxes imposed were announced before for products like mobile phones, electric vehicles, and their components, etc. This has ensured a gradual increase in the domestic value addition capacity of our country. This increase in import duties done with aiming at discouraging companies from importing components and goods from outside India and encouraging them instead to replace them.
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