The Commerce & Industry Ministry has asked the Finance Ministry to address the inverted duty structure, where import duties on inputs are more than duties on finished products, for over a dozen items, in the forthcoming Union Budget for 2024-25, an official said.

Despite steps taken in past Budgets to address the problem, the sectors which still get affected due to presence of the inverted duty structure, include textiles, engineering goods and leather.

“The Commerce & Industry ministry always shares such list of goods, where customs duties on components are higher than the finished products. We have given our inputs to the Finance Ministry on the inverted structures. It is a list of about 13-14 products. They will look at it in the context of Budget discussions,” the official said.

As inverted duty structures are not economically efficient, the Ministry is hopeful that the Budget would address it, the official added.

Inverted duty structure goes against the government’s emphasis on ‘Make in India’ as it encourages the import of finished products rather than raw materials by imposing a higher import duty on the latter.

The Union Budget for 2024-25 is likely to be presented on February 1, 2024.

Inverted duty structure has also been created due to Free Trade Agreement pacts signed by India with its partner countries. The industry, in the past, has complained about the FTA with the ASEAN in particular resulting in a situation where the finished product is imported duty free, because of duty elimination under the pact, while import taxes on intermediates continue.

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