An array of customs duty cuts across sectors, including key components for manufacturing of electronic items, will boost overall production capacities across industries.
Though the custom duties on completely built units of electric vehicles as well as other variants have been increased to 70% from the earlier 60%, this is unlikely to have any material impact as most of such cars are now assembled in India, barring the top-end variants. Nonetheless, an increase in customs duty will further aim to promote domestic manufacturing going ahead.
To begin with, the concessional customs duty on lithium-ion batteries for use in mobile phones and EVs has been maintained at 5% for another year. Ditto for silica used in optical fibre cable manufacturing, parts for manufacturing wind-operated electricity generators and certain drugs and diagnostics kits among others.
“The status quo on custom duty on lithium-ion batteries is a welcome step and will promote energy storage and help to provide round-the-clock renewable power at reduced cost. The amalgamated steps taken will not only help reduce carbon intensity of the economy but will simultaneously help create job opportunities. The ultimate goal is to reduce dependence on fossil fuel inputs and make the country assume technology and market leadership in this sunrise sector,” Kush Singh, CEO at Essar Power said.
“The exemption of customs duty for capital goods and machinery for lithium-ion battery manufacturing will reduce the final prices of batteries and make electric vehicles more affordable for consumers. The key equipment for battery cell manufacturing is imported and its share is about 65-75% of the overall infrastructure costs,” Rishabh Jain, senior programme lead at Council on Energy, Environment and Water (CEEW) said.
“The reduction of basic custom duty on certain raw materials – denatured ethyl alcohol, acid grade fluorspar and crude glycerine – will boost overall production capacity of Indian chemical companies. This rejig in the custom duty pricing will enhance the manufacturing and encourage exports of specialty chemicals in the global market,” Anand Desai, MD at Anupam Rasayan India, said, adding the Indian chemical industry has contributed 7% of the country’s GDP in 2022.
The customs duty on certain parts for manufacturing of open cell for TV panel has been reduced to 2.5% from 5%, which would lead to a price fall.
“This is a long-awaited decision. The government’s bold move to reduce the custom duty on open cell to a mere 2.5% is a gamechanger, set to unleash the full potential of the domestic TV manufacturing industry and give them a fighting chance against the global giants. This will help the domestic TV manufacturing industry to scale up production,” Avneet Singh Marwah, CEO of Super Plastronics, the exclusive brand licensee of Thomson in India, said.