The Hindu : Import duty cut on raw materials for auto parts, air-conditioners

Online edition of India's National Newspaper
Sunday, Jan 25, 2004

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Import duty cut on raw materials for auto parts, air-conditioners

By Alok Mukherjee

CHENNAI, JAN. 24. The Government has announced import duty cuts on a number of items used as raw material in the manufacture of air conditioners, refrigerators, automobiles and telecom and Information Technology-related products.

Interestingly, information about the duty cuts have come from a tax-related website — taxindiaonline.com — which carried the item on Friday evening. The cuts have a dual purpose — to make the end product cheaper for the consumer and, at the same time, provide a competitive edge to the domestic industry which would face increased competition once the free trade agreement (FTA) with Thailand comes into force. India is planning to go in for more such free trade agreements with other countries in the South Asian region.

For the white goods industry and the automobile sector, duty cuts have been announced in the case of 32 raw materials which will attract tariff in the 10 to 15 per cent range. In the case of telecom and IT-related products, 25 items will attract only 10 per cent import duty.

A series of excise and customs duty cuts were announced by the Government in early January, once it informally made up its mind to go in for early elections. The reduced duties are expected to lower the end price of the products used increasingly by the middle class. The Government was unable to offer any direct tax sops to this segment of voters on election-eve because of legislative constraints.

The revenue loss on account of lower import duty on the number of items has not been specified, but the Government's stated position is that with its commitment to lower customs tariffs to levels prevailing in the ASEAN countries, a revenue loss is inevitable.

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