In an effort to lift the domestic MSMEs, keep imports down and raise revenue, the Indian government on Saturday hiked customs duty on several products, indicating a price rise soon for millions of consumers across the spectrum – from household appliances to electric vehicles and even toys.
A day prior to the Budget 2020, IANS had reported on that as a measure to boost domestic small and medium industry, the government may consider a hike in customs duty on over 300 items like toys, furniture, footwear, coated paper, rubber items among other in the Union Budget.
For the cellular mobile industry, the government hiked customs duty, from 10 per cent to 20 per cent, on printed circuit board assembly (PCBA) which is the key component in feature phones as well as smartphones.
The customs duty, which was earlier zero on vibrators/ringers and display panels of mobile phones, was increased by 10 per cent on both the components, indicating a price rise in feature phones as well as entry-level smartphones.
“The decision will push local manufacturing and require skilled labour to work on the SMT assembly lines for PCBs and will help local vendors. The prices will stablise as Indian manufacturers push towards CKD (completely knocked down) levels,” said Tarun Pathak, Associate Director, Counterpoint Research.
If you are a housewife, home appliances like tableware, kitchenware (porcelain, china, ceramic, clay, iron, steel, copper, aluminium), glassware, padlock, brooms, hand sieves, combs and vacuum flasks will be dearer as the customs duty was increased on all these items from 10 per cent to 20 per cent.
Electrical appliances, which include fans, food grinders/mixers, hair-removing appliances, water heaters, hair/hand dryers, ovens, cookers, toasters, coffee makers and insect repellents, also saw customs duty doubled from 10 per cent to 20 per cent.
Besides giving relief to the domestic industry and boosting employment, the move aims to keep imports down and help to raise revenue. Many of these are industries that are essentially concentrated in the small and medium sectors and employment-intensive.
The government announced a raise in customs duty on imported footwear/footwear parts to 35 per cent from 25 per cent and on furniture goods (seats, article of bedding, mattresses, lamps and lighting) to 25 per cent from 20 per cent.
Harkirat Singh, Managing Director, Aero Club (maker of Woodland and Woods), told IANS that while this is a welcome move especially for a ‘Make in India’ brand like them, “it will marginally shake our production costings due to our dependencies on good quality/imported raw materials required for manufacturing the rough and tough shoes, Woodland is known for”.
“The current import duty on footwear is 25 per cent, which is on the higher side and further increase in this will make India an unviable market for an international brand like ours,” Dharmender Khanna, Head of Lotto brand, had said in a recent media statement.
While customs duty was raised a massive 60 per cent from current 20 per cent on toys (tricycles, scooters, scale motors and dolls), electric vehicles also saw a big increase.
The complete Built Units (CBUs) of bus and trucks saw duty up from 25 per cent to 40 per cent, semi-knocked down (SKD) units of bus, truck and two-wheelers saw the duty hike from 15 per cent to 25 per cent.
While SKDs of passenger vehicles (PVs) and three-wheelers witnessed a duty hike from 15 to 30 per cent, bus and trucks saw customs duty up from 10 to 15 per cent – indicating the duty hike to hit consumers soon.
Several items in the machinery industry like commercial freezers and welding parts also saw customs duty hike, ranging from 7.5 per cent to 12.5 per cent.
Other items like glass beads, artificial flowers, ornaments, frames and mirrors also saw duty hike from 10 per cent to 20 per cent.
The Commerce and Industry Ministry, in its budget recommendations, had proposed rationalisation of basic customs on over 300 items across sectors.