FM eyes Asean tariff levels

As part of the move to lower tariffs to Asean levels, Finance Minister P Chidambaram announced a reduction in the peak Customs duty to 15 per cent from 20 per cent.

With a lower peak rate, the Centre's Customs duty collection is projected to fall 5.45 per cent to Rs 53,182 crore in 2005-06, against Rs 56,250 crore in the revised estimates for the current financial year.

The government has revised the Customs collection target for the current fiscal year by Rs 2,000 crore, an increase of 3.5 per cent, from the Budget estimate of Rs 54,250 crore. The higher collection during the current fiscal year is expected on account of buoyant imports.

With an appreciating rupee, experts said the effective rate of protection would be even lower.

To boost investment and keep the duty structure in line with peak duty cut, Chidambaram proposed bringing down the Customs duty on some capital goods and their components.

In line with the job generation potential for sectors like textiles, the government proposed lower duties on textile machinery, besides cutting the import tariff on polyester and nylon chips, textile fibres, yarns and intermediates, fabrics and garments from 20 per cent to 15 per cent.

Similarly, to help the food processing industry, the duty on refrigerated vans is proposed to be reduced from 20 per cent to 10 per cent.

Chidambaram also proposed to reduce the Customs duty on nine specified machinery used in these sectors to 5 per cent.

The Customs duty structure for petroleum products was also altered. While the tariff on crude was halved to 5 per cent, on petrol and diesel it was fixed at 10 per cent. For cooking gas and subsidised kerosene, it was proposed to have zero duty.