To promote domestic manufacturing and attract foreign investments in line with the government’s ‘Make in India’ programme, the Budget has proposed to reduce Customs and excise duties on a number of inputs and extend residency to foreign investors.

Sectors that will benefit from the changed rates include IT hardware, capital goods, defence production, textiles, mineral fuels and oils, chemicals and petrochemicals, paper, paperboard and newsprint and maintenance repair and overhauling of aircrafts and ship repair.

“Customs and excise duty structure plays an important role in incentivising domestic value addition towards the ‘Make in India’ campaign. I propose to make suitable changes… and simplify procedures, so as to reduce costs and improve competitiveness of domestic industry in several sectors,” Finance Minister Arun Jaitley said in his Budget. For instance, the Budget proposes to exempt from basic customs duty (BCD) and excise duty inputs, parts and components for manufacture of charger/adapter, battery and wired headsets /speakers, of mobile phone, subject to actual user condition.

It also proposes to reduce the BCD on a variety of chemicals and petrochemicals, including hydrocarbons and ethyl alcohol, from 5 per cent to 2.5 per cent, and from 2.5 per cent to nil.

Wood in chips or particles for manufacture of paper, paperboard and news print, so far attracting a BCD of 5 per cent have been exempted.

Similarly, excise duties have been reduced or exempted for inputs such as on parts and components of routers, broadband modems, set-top boxes for accessing internet, set-top boxes for TV and CCTV cameras.

To encourage foreign investors and recognise investors who chose to produce in the country, the Budget has proposed to accord ‘Residency Status’ to some, subject to certain conditions. At present, these investors are granted business visa only up to five years at a time.

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