Industry body FICCI has demanded rationalisation of cut in peak customs duties proposed in Budget 2007-08 claiming that it is affecting manufacturing of around 20 consumer durables.These items include colour TV, air conditioners, refrigerators and electric fans besides set top boxes, cement and edible oil.After a quick survey of manufacturing sector, FICCI has claimed that cut in peak duty rates from 12.5% to 10% to align it with ASEAN levels, coupled with steep reduction in import duty under bilateral trade agreements has widened the duty differentials for key sectors.India has signed bilateral free trade agreements with Thailand, Singapore and Sri Lanka."The import duty reductions on some basic raw materials would though help domestic industry, but zero import duty on finished goods under FTA and higher duty for raw materials and intermediate products would adversely affect domestic manufacturers of these items," a FICCI statement said.The chamber urged the government to announce a matching tariff reduction for relevant inputs, whenever any finished product is subject to lower import duty as a result of general tariff reduction and also as a result of a free trade agreement.Inverted duty - an anomalous situation where the duty on the finished product is lower than that on raw materials and intermediate products - acts as a disincentive for the domestic manufacturer in the global market.
