CII has in its recommendation emphasised removal of 0% Customs duty except for life saving drugs and security related items, and those agreed through multilateral and bilateral agreements.
CII has also urged the government to remove anomalies in the customs duty structure where the inputs to a product attract higher duty than the product itself. Customs duty, for instance, on set-top box used in cable transmission system is Nil whereas its imported inputs attract a duty of 5% or 12.5%, on synthetic fibers and yarns duty is 10% in contrast to 12.5% for its major input – like methyl acrylate, dimethyl formamide, etc. More such anomalies have been cited in cutting tools, footwear and tyres in the CII Pre-Budget Memorandum.
The other anomalies pointed out by CII have arisen due to the bilateral Free Trade Agreements signed by India wherein import of specified products have been allowed at NIL duty. Consequently, the import of full product is turning to be cheaper than import of inputs at the prevalent customs duty rates and manufacture of the said product. The India-Thailand FTA has boosted import of certain products from Thailand. Hence, CII has urged for reduction of customs duty to 5% on the major inputs required for manufacture of those products, which are affected by NIL duty due to India – Thailand FTA.
In the Budget 2006, the levy of 4% of special CVD was extended to all imports with certain exceptions, which includes various types of projects and others wherein machinery and equipment are used. This has adversely affected the indigenous manufacturers of such goods. Hence, CII has recommended the removal of exemption of special CVD of 4% on all type of projects and others to counter balance internal taxes such as CST/VAT.
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