The Hindu Business Line : Import duty cut on inputs for auto parts, others

IN a fresh dose of off-Budget, pre-election Customs duty cuts aimed at bolstering competitiveness of the domestic manufacturers of auto components, plastics and resins, electrical appliances and white goods, the Finance Ministry has lowered import duties on as many as 32 raw material and intermediate items that go into the production of these goods.

The timing of the latest move assumes significance considering that a host of finished good manufacturers have been apprehending increased competition from imports on account of duty concessions that India is obliged to offer under bi-lateral trade agreements, either already signed or prospective, with Thailand, Singapore and other East Asian economies.

In this light, the domestic industry, especially auto component and consumer electronics/white goods manufacturers, have been demanding that they be allowed to import raw materials and intermediates at lower duties, thereby making them more competitive vis-à-vis finished good imports.

The Government, it would appear, has more or less acceded to their demands.

The manufacturers of plastics and resins such as polypropylene, polyethylene terephthalate, epoxy resins, polyurethane and polyamides can now import catalysts at 15 per cent as against 20 per cent earlier.

For epoxy resin producers such as JK Paper and Atul Ltd, there is an additional sop in the form of a lower 10 per cent duty on imports of bis-phenonol A and epichlorohydrin.

But for every JK Paper and Atul, there could also be losers such as Tamilnadu Petroproducts Ltd, which makes epichlorohydrin.

The auto component industry has a lot to gain from the latest exercise, which brings down the import duty on raw materials to 10 per cent.

These include non-alloy pig iron (used for manufacturing piston rings), alloy steel of various grades and valve steel alloy steel bars (used for production of engine valves), steel quality springs, free cutting steel, bars and rods of high speed steel and silico-manganese steel (for making fuel injection parts) and aluminium alloys and high-purity EC/CG grade aluminium ingots that go into pistons or piston assemblies.

In addition, there is good news for domestic ball-bearing manufacturers such as SKF Bearings India, with the Finance Ministry bringing down the Customs duty to 10 per cent on the bearing quality alloy steel wire rods, round bars and bright bars imported by them.

For the white goods sector, the import duty on compressors, thermostats, copper tubes and parts used for manufacture of refrigerators and air-conditioners have been lowered from 20 per cent to 15 per cent.

These manufacturers can also import aluminium sheets and foil at an even lower duty of 10 per cent.

Finally, for television and other electrical/electronic goods manufacturers, there has been a cut in customs duty to 10 per cent on glass envelopes used for cathode-ray tubes, liquid crystal displays, loudspeakers, electron guns, antennas, relays, EHT cables, microwave passive parts, magnetic heads, capacitors, ferrite parts (including magnets), connectors, switches and line driver transformers.

Besides, there is a similar duty cut on fibre optics and other optoelectronic parts and devices namely, couplers, attenuators, connectors, splicers, multiplexers and demultiplexers.

While in all these goods, the basic Customs duty (BCD) has been lowered by 5 per cent, the actual reduction will, however, be much more if one considers that `mini-budget' of January 9 had abolished the 4 per cent special additional Customs duty. Besides, the incidence of the additional or countervailing duty will also be lower, as it would be computed on a reduced BCD.

More Stories on : Excise and Customs | Excise and Customs

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Share buyback: Tender offers fare better

US Bill `may hurt Indian IT sector in the long run'

Outsourcing issue likely to snowball

Import duty cut on inputs for auto parts, others

Forex reserves register $ 698 m decline

Exclusive marketing rights — Novartis gets stay against 6 firms