Boost for Lo­cal Man­u­fac­tur­ing

The Economic Times - - Front Page - Deepshikha.Sikar­war@ times­group.com

In­dia’s am­bi­tious Make in In­dia pro­gramme got a boost with the bud­get un­veil­ing fresh steps to cor­rect anom­alies in the in­di­rect taxes struc­ture to en­cour­age man­u­fac­tur­ing in the coun­try. Sec­tors in­clud­ing in­for­ma­tion tech­nol­ogy hard­ware, cap­i­tal goods, de­fence pro­duc­tion, tex­tiles, min­eral fu­els and min­eral oils, chem­i­cals and petro­chem­i­cals, pa­per, pa­per­board and newsprint, main­te­nance re­pair and over­haul­ing (MRO) of air­craft and ship re­pair will see changes in their cus­toms and ex­cise duty struc­ture. This will bring down man­u­fac­tur­ing and com­pli­ance costs, boost­ing global com­pet­i­tive­ness. In many of these cases, in­puts at­tract higher du­ties than fin­ished goods, mak­ing im­ports more at­trac­tive than lo­cal man­u­fac­ture.

“Cus­toms and ex­cise duty struc­ture plays an im­por­tant role in in­cen­tivis­ing do­mes­tic value ad­di­tion to­wards Make in In­dia cam­paign of our gov­ern­ment,” fi­nance min­is­ter Arun Jait­ley said, an­nounc­ing changes to in­di­rect taxes that he said were aimed at im­prov­ing com­pet­i­tive­ness.

Sil­ver medal­lion, sil­ver coins hav­ing sil­ver con­tent not be­low 99.9%, semi-man­u­fac­tured, will now face coun­ter­vail­ing duty to en­cour­age the do­mes­tic jew­ellery sec­tor. As part of this ex­er­cise, the gov­ern­ment has also widened and deep­ened the duty draw­back scheme.

“Cor­rec­tion in ex­cise and cus­toms duty rates (is) largely to ad­dress duty in­ver­sion and sup­port the Make in In­dia ini­tia­tive,” said Ra­jeev Dimri, leader, in­di­rect tax, BMR & As­so­ciates LLP. “The bud­get con­tin­ues to work to­wards the theme to en­cour­age do­mes­tic man­u­fac­tur­ing,” said Bipin Sapra, part­ner, EY, point­ing to the levy of spe­cial ad­di­tional duty of 2% on pop­u­lated circuit boards to in­cen­tivise their man­u­fac­ture in the coun­try be­sides re­moval of cus­toms duty on so­lar pan­els and its re­place­ment with a cred­itable levy of coun­ter­vail­ing duty. “Cus­toms du­ties have been re­duced on quite a few com­po­nents,” said MS Mani, se­nior di­rec­tor, in­di­rect tax, Deloitte Hask­ins & Sells LLP.

“In ad­di­tion, there has also been an ex­emp­tion of ex­cise duty on sev­eral so­lar en­ergy items, mi­cro-ATMs and PoS (point of sale) de­vices, which is a further boost to the Make in In­dia ini­tia­tive,” said Mani. The gov­ern­ment has also an­nounced a num­ber of ini­tia­tives to has­ten trad­ing across bor­ders for ease of do­ing busi­ness. This will cut cus­toms clear­ance time.

A host of pro­ce­dural sim­pli­fi­ca­tions have also been made. Im­porters for in­stance won’t have sep­a­rate con­di­tions for get­ting their goods from courier or postal ter­mi­nals at the ports.

Pro­posed abo­li­tion of the re­search and de­vel­op­ment cess, cur­rently 5%, will ben­e­fit com­pa­nies un­able to off­set this against ser­vice tax li­a­bil­ity and en­cour­age such ac­tiv­ity in the coun­try. “For some com­pa­nies who were li­able to pay re­search and de­vel­op­ment (R&D) cess but did not have any ser­vice tax li­a­bil­ity, this cess be­came a cost,” Mani said. ₹ ₹

Im­porters won’t have sep­a­rate con­di­tions for get­ting their goods from courier or postal ter­mi­nals at the ports

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