The Hindu Business Line : CII lists anomalies in Customs duty structure

Though a few anomalies in the Customs duty (in case of aluminium and electricity meters) had been removed in the Budget, certain inputs attracted higher duty than the final products and such anomalies need to be reviewed, according to a statement.

The industry body pointed to anomalies in automotive tyres, chemicals, cutting tools (solid carbide drills/routers), equipment for inland container freight stations, glycerine (refined), petrochemicals, soaps and toiletries.

The Customs duty on automotive tyres has been reduced from 20 per cent to 15 per cent, whereas natural rubber smoked sheets and technically specified natural rubber continue to attract 20 per cent duty.

The Customs duty on chloromethane has been reduced from 20 per cent to 10 per cent, and that on the critical input methanol from 20 to 15 per cent.

The CII has welcomed the Government's declared policy of making the Customs duty structure closer to that of East Asian countries. On the growing number of Free Trade and Preferential Trade Agreements being signed by India , the CII has stated that while these agreements have certain advantages for exporters in India, they could affect the manufacturers if a corresponding reduction in Customs duty on inputs is not made.

Under the India-Thailand Free Trade Agreement, there is an Early Harvest Scheme (EHS) covering 82 tariff lines. The EHS list includes air-conditioners, refrigerators, colour television sets, colour picture tubes and gear boxes for vehicles and the Customs duty on these items was reduced to 12.5 per cent with effect from September 1, 2004.

As per the agreement, the duty will be further reduced to 6.2 per cent from September 1, 2005 and complete duty elimination will be achieved in 2006.

To enable the indigenous manufacturers successfully compete with the imports from Thailand, the import duties on their major inputs should also be reduced.

The CII has recommended that in future trade agreements, the Customs duty on manufactured goods should not be less than five per cent.

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