New Delhi, Jul 23: The government on Tuesday slashed customs duties on a range of products, including gold, silver, critical minerals, mobile phones, and other electronic items, to cut input costs, increase value addition, promote export competitiveness, and boost domestic manufacturing.
The duties were also reduced on shea nuts; marine sector goods like prawn and shrimp feed, and fish feed; inputs for the manufacture of these feeds like lipid oil; cancer drugs; other precious metals like silver and platinum; textile, steel, copper, capital goods, shipping, medical equipment, and leather sector items.
The basic customs duty (BCD) on coins of precious metals, gold/silver findings, and gold and silver bars was reduced to 6 per cent from 15 per cent. It was cut to 5.35 per cent from 14.35 per cent for gold and silver dore.
On platinum, palladium, osmium, ruthenium, and iridium, the levy was cut to 6.4 per cent from 15.4 per cent.
The gems and jewellery exporters have been demanding for the last several years to cut duties on precious metals to boost exports and manufacturing.
“My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation while keeping the interest of the general public and consumers surmount,” Finance Minister Nirmala Sitahraman said.
“To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6 per cent and that on platinum to 6.4 per cent,” she added.
The significant duty cuts on precious metals will help reduce smuggling, but cost the government an annual revenue loss of over Rs 28,000 crore based on 2023-24 import levels, think tank GTRI said.
In FY24, India imported gold worth USD 45.54 billion and silver worth USD 5.44 billion, while exporting jewellery worth USD 13.23 billion.
In volume terms, India normally imports 800-900 tonnes annually.
In 2022, India has raised its basic import duty on gold to 15 per cent from 10.75 per cent. India is the world’s second-biggest consumer of the precious metal.
India fulfils most of its gold demand through imports and it put pressure on the rupee and current account deficit.
Seizure of smuggled gold rose to a record high of 3,917.52 kg in the January-October period, 2023, in 4,798 cases.
As per government data, 3,502.16 kg of smuggled gold was seized in the country in 2022, and 3,982 smuggling cases were detected.
In 2021, 2,383 kg of smuggled gold was seized and 2,445 cases detected while in 2020, 2,155 kg of smuggled gold was seized and 2,567 cases were detected.
The precious metal accounts for over 5 per cent of the country’s total imports.
Switzerland is the largest source of gold imports, with about 40 per cent share, followed by the UAE (over 16 per cent) and South Africa (about 10 per cent).
The minister also proposed to undertake a comprehensive review of the rate structure over the next six months to rationalise and simplify it.
On mobile phones and parts, she said with a three-fold increase in domestic production and an almost 100-fold jump in exports of mobile phones over the last six years, the Indian mobile phone industry has matured.
“In the interest of consumers, I now propose to reduce the BCD on mobile phones, mobile PCBA and mobile chargers to 15 per cent,” she said, adding that customs duties are fully exempted on 25 critical minerals.
This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors, the minister said.
