More than 300 items may see customs duty hike in Budget

As a measure to boost domestic small and medium industry, the government may consider a hike in customs duty on over 300 items like toys, furniture, footwear, coated paper, rubber items among others in the Union Budget.

Besides giving relief to the domestic industry and boosting employment, the move is expected to keep imports down and help to raise revenue. Many of these are industries which are essentially concentrated in the small and medium sectors and employment-intensive.

The Commerce and Industry Ministry in its budget recommendations has proposed rationalisation of basic customs on over 300 items across sectors including furniture, chemicals, rubber, coated paper, and paper boards.

On footwear and related products, the Ministry has suggested increase in duty to 35% from the current 25% while for new pneumatic tyres of rubber, it has proposed to hike customs duty to 40% from the current 10-15%.

The import duty hike on footwear is a move to thwart the increase in imports of undervalued and cheap footwear. While the majority of imports are coming from ASEAN countries, with which India has a free trade agreement, it is suspected that China is re-routing large quantities of footwear through these countries.

The ministry has proposed to increase import duty on wooden furniture to 30% from the current 20%. For coated paper, paper boards and hand made papers, it has suggested doubling the duty to 20%.

The Ministry has asked for the removal of import duty on waste paper and wood pulp, which is currently at 10% and 5%, respectively. The paper industry has expressed concerns about cheap imports and a surge in inbound shipments.

For wood, metal and plastic toys, the ministry has suggested increase in import duty to up to 100 per cent from the current 20 per cent. Import of these toys increased to $304 million in 2018-19 from $281.82 million in 2017-18 from China and Hong Kong.