‘New duty structure would give us leeway at WTO’

New Delhi, January 30: | Updated: Jan 31 2002, 05:30am hrs
The proposal to adopt an 8-digit level classification for levying customs duties mooted in the medium-term export strategy is aimed at increasing the duties on “sensitive commodities” to the WTO-bound level and lowering on key inputs required by exports, HAC Prasad, economic adviser in the commerce ministry said.

At present, classification for imposing customs duties is based on a 6-digit level. Mr Prasad, who had laboured hard, for the past one and a half years, in framing the strategy for the next five years (2002-07), told The Financial Express that the move which would give greater flexibility to the government in adjusting the duty structure in response to changing situations would also greatly facilitate New Delhi in the forthcoming WTO negotiations.

Mr Prasad said that with the rupee depreciation, imports had become costlier and to counter the increase, the strategy had advocated lowering of tariffs on imports across the board though the measure would have no negative impact on the domestic sector. The economic adviser said that lowering of customs and excise duties on key inputs required for exports would help bring down the transaction cost of exports and obviate the need for refund of the duties in the shape of drawback.

He said the move for going for 8-digit classification for import tariffs had been approved by the task force consisting members from the central board of excise and customs, directorate-general of commercial intelligence and statistics and the director-general of foreign trade, besides himself.

Yet another advantage of shifting to the 8-digit level classification was that many of the export incentive schemes which are aimed at offsetting the higher import duties could be phased out with nil or low duties.

Mr Prasad said that the strategy had suggested establishment of port-based special economic zones (SEZs) with off-shore banking facilities. Currently, the existing 122 SEZs are not port-based. The possibility of the auto sector setting up units in the SEZs had also been mooted, he added.