| By reducing the peak customs duty to 10 per cent from 12.5 per cent on non-agricultural products, finance minister P Chidambaram has sought to reduce costs for user industries, level the playing field for transnational companies and rein in inflation. |
| The effective import duty rate, factoring in the 16 per cent countervailing duty and 4 per cent special additional duty and the education cess, will come down from 36.73 per cent to 33.85 per cent. |
| "After adding all the additional duties, the customs duty on finished products will come down, which is good news for the user companies," said Heetesh Veera, partner, Ernst and Young. |
| The finance minister, in his Budget speech, said the peak duty cut was a step towards East Asian countries' rates, which range between 5 and 7.5 per cent. |
| Lower import duties have been a key issue in multilateral trade negotiations. |
| "This will certainly help the government at the next round of World Trade Organisation talks," said Manab Majumdar, team leader of WTO, with Federation of Indian Chambers of Commerce & Industry. |
| Corporate India said the cut in import duties was expected. "I think in order to curtail the rising prices, a cut was expected. We are ready for competition," said Videocon Industries chairman Venugopal Dhoot. |
| The government has also reduced import duties on various raw materials by 5 per cent to 7 per cent. "This will help Indian companies import raw material at lower cost," said Nihal Kothari, partner, RSM. |
| With the import duties coming down, analysts said the domestic companies would be forced to reduce prices. |
| The highest import duties on high-end products like automobiles would continue and there would not be any big impact on prices while importing a car, which attracts 162 per cent duty, though import of auto parts will attract lower duty. |
| WHAT COULD BE CHEAPER |
| |
Top Section
Explore Business Standard