India Will Comprehensively Adjust Its Tariffs In 2021

- Feb 22, 2021-

On February 1, Indian Finance Minister sitaraman submitted the budget for the fiscal year 2021 / 2022 to Parliament. As soon as the new budget is announced, it has attracted the attention of all parties.

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Website: https://www.indiabudget.gov.in/doc/impbud2020-21.pdf

In this budget, import tariff adjustment focuses on electronic and mobile products, steel, chemical industry, auto parts, renewable energy, textiles, MSME manufactured products and agricultural products that encourage local production. Tariffs on certain auto parts, mobile phone parts and solar panels have been raised to boost domestic manufacturing.

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Website query: https://economictimes.indiatimes.com/topic/Basic-Customs-Duty

For example, tariffs on refrigerators and air-conditioning compressors have increased from 12.5% to 15%, while tariffs on LED lights, parts and spare parts (such as printed circuit boards) have also increased from 5% to 10%.

Now, the import of lithium-ion batteries or raw materials, as well as ink cartridges and ink nozzles will be charged 2.5% tariff. A basic tariff of 10% will be imposed on leather products. To help local producers, the tariff on nylon fiber and yarn imports has been reduced from 7.5% to 5%.

Website query:

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https://economictimes.indiatimes.com/small-biz/trade/exports/insights/budget-2021-400-old-duty-exemptions-to-get-a-rejig-duties-cut-on-many-items-to-help-msmes/articleshow/80631119.cms

So what are the specific product tariff adjustments? Let's see:

Tariff reduction products include

The tariff on scrap copper was reduced to 2.5%;

Tariff free scrap (up to March 31)

The duty on naphtha was reduced to 2.5%;

The basic tariff on imports of newsprint and light coated paper was reduced from 10% to 5%.

The tariff of solar inverter is increased from 5% to 20%, and the tariff of solar lamp is increased from 5% to 15%;

The tariff on gold and silver should be rationalized: the basic tariff on gold and silver is 12.5%. Since the tariff was raised from 10% in July 2019, the price of precious metals has risen sharply. To bring it up to its previous level, tariffs on gold and silver were reduced to 7.5%. The tariff on other gold mines was reduced from 11.85% to 6.9%; the yield of silver ingots increased from 11% to 6.1%; the yield of platinum increased from 12.5% to 10%; the proportion of gold and silver discovered decreased from 20% to 10%; and the yield of 10% precious metal coins decreased from 12.5%.

The import tax on semi-finished products, plates and long products made of non alloy, alloy and stainless steel materials was reduced to 7.5%. In addition, the Ministry of finance of India is also considering the early cancellation of scrap tariff, which was originally scheduled to be effective until March 31, 2022.

Basic tariff (BCD) for nylon sheet, nylon fiber and yarn reduced to 5%.

Jewelry and gemstones fell from 12.5% to 7.5%.

Products subject to tariff increases include

The tariff on cotton was raised from 0 to 10%;

Import duties on raw silk and silk yarn will be raised from 10% to 15%;

7% tariff for TBM and 2.5% tariff for its parts;

The tariff on footwear increased from 25% to 35%;

Toy tariffs increased from 20% to 60%;

The tax rate on furniture such as seats, lamps and mattresses will be raised from 20% to 25%;

Tariffs on electrical appliances such as fans, Food Grinders / blenders, razors, water heaters, ovens, toasters, coffee machines, heaters and irons, and fixed items such as filing cabinets and paper trays increased from 10% to 20%;

The tariff on commercial refrigerators increased from 7.5% to 15%;

Tariffs on refrigerators and air-conditioning compressors increased from 10% to 12.5%;

The tariff on railway transport fans was raised from 7.5% to 10%;

The tariff on welding and plasma cutting machines increased from 7.5% to 10%;

In terms of electric vehicles, the tariff on the import of fully built electric buses and electric trucks will be increased from 25% to 40%, the tariff on semi-finished products of buses, trucks and two wheelers will be increased from 15% to 25%, the tariff on passenger cars and tricycles will be increased from 15% to 30%, and the tariff on all imported parts of electric vehicles (parts imported to India for assembly) will be increased from 10% to 15%;

The tariff on some parts of mobile phones has been raised from "zero" to 2.5%; the purpose of this tariff increase is to further enhance the added value of domestic products. Some of the original zero tariff products have been slightly raised to 2.5%, including PCBA, camera module and connector of mobile phone components;

Import duties on LED lights or fixtures were raised from 5% to 10%;

The tariff on shelled walnuts will be raised from 30% to 100%.

What needs to be highlighted is the introduction of the agricultural infrastructure and Development Center (AIDC) in India's new fiscal year budget. The new tariff is an additional tariff on certain goods. These changes will take effect on February 2, 2021.

For example, India will reduce the import tariff on palm oil base from 27.5% to 15%, but will impose an additional tax of 17.5% on imports; an additional tax of 35% on apples; and an additional tax of 40% on peas.

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For more additional taxes, please stamp the website:

https://taxguru.in/custom-duty/key-changes-customs-excise-union-budget-2021.html

"Our tariff policy should achieve the dual goals of promoting domestic manufacturing and helping India enter the global value chain and export better," finance minister Nirmala sitharaman said in his budget speech. The focus now has to be on obtaining raw materials and exporting value-added products. "

Mr. sitaraman said the government was carrying out a thorough reform of the entire structure. 80 obsolete tax-free policies have been eliminated, and another 400 are under review. By October 1, 2021, a new "perfect" tariff system will be established.

In addition, vilmani, India's executive director at the International Monetary Fund, said India needs to adopt a dual trade policy to reduce its import dependence on manufacturers like China, while attracting supply chains in other parts of the world through lower and more uniform import tariffs. Although the production related incentive scheme is a good start (for effective import substitution in manufacturing), the government still needs to further reform the tariff structure to achieve the goal of dual trade policy. "

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