Budget 2016: Revised customs and excise duty boost domestic industry

Some defence-related materials used for maintenance, repair and overhaul [MRO] of aircraft and ship, for which excise duty was earlier applicable has now been reduced to nil The Dollar Business Bureau

Union Budget 2016: revised customs and excise duty to incentivise domestic value addition

Excise duty on equipment such as electric motors, chambers and washers was reduced to 6% from its earlier 12.5%, whereas duty on industrial solar water heaters was increased from 7.5% to 10%

In an effort to stimulate the Prime Minister Narendra Modi-led Make in India initiative and improve ease of doing business in the country, the government on Monday proposed revised customs and excise duty rates on certain raw material, goods and components to reduce cost and bring competitiveness in the domestic industry. “Customs and excise duty structure plays an important role in incentivising domestic value addition towards Make in India campaign. In line with that, I propose to make suitable changes in customs and excise duty rates and simplify procedures, so as to reduce costs and improve competitiveness of domestic industry,” Finance Minister Arun Jaitely said in his Union Budget 2016 speech on Monday. The Finance Minister underscored incentivising domestic value addition as one of the key drivers of the Make in India mission and picked out 23 major sectors, including capital goods, renewable energy, defence production, construction and automobiles among others, to adjust the scope of amendments. Among the listed sectors, some sectors are already on the ropes, battling global slowdown and subdued domestic activity. Therefore, a special emphasis was given to these sectors to improve their overall performance in the domestic industry. For example, excise duty on equipment such as electric motors, chambers and washers –most of which are used in agriculture – was reduced to 6% from its earlier 12.5%, whereas duty on natural latex rubber made balloons and industrial solar water heater was increased from 10% and 7.5% to 20% and 10% respectively. Meanwhile, some defence-related materials used for maintenance, repair and overhaul [MRO] of aircrafts and ships, for which excise duty was earlier applicable has now been reduced to nil. This development is also a part of the government’s 18-month long Make in India campaign to make the country a manufacturing powerhouse. On the Ease of Doing Business front, the government has not made any major announcement in terms of giving this initiative a complete new look, but has tried to tweak the existing ones to stick to its minimum government maximum governance ideology, achieve overall economic growth and stimulate investments from foreign as well as local entities. At a time when the global economy has been going through a tumultuous phase, with the European Union on average making no economic progress added by a scare of Britain casting itself off from the EU and exposing the group to a financial uncertainty, the Middle East and Northern Africa battling their ongoing political disturbances contributing significantly to their already-tumbling economy and China struggling to stabilise its economic growth, India seems to be the only bright spot in the world economy. Several international bodies in the recent past as well as Finance Minister Arun Jaitely in his speech on Monday projected an enviable economic growth in the financial year 2016-17 for India. With the Union Budget 2016, the government has seemed to tick some unticked boxes as it has focused more on improving the country’s abysmal infrastructure with over Rs.2,21 trillion allocations of funds in roads, railways, airports and waterways, rationalising tax structures and restructuring the rural economy.

March 02, 2016 | 011:20am IST

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The Dollar Business Bureau - Mar 02, 2016 05:41 IST

Budget 2016: Revised customs and excise duty boost domestic industry

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