Certain Tariffs Eliminated Ahead Of US Trade Deal

Chennai: Ahead of the Indian-US trade deal, the Budget eliminated duties on several goods that would improve the market access of US exporters. The Budget provided some solace to Indian exporters struggling with US tariffs and suspension of GSP and introduction of CBAM charges by the European Union, by facilitating sales of SEZ units in domestic markets, removing the cap on courier exports, and increasing duty-free import limits for inputs of certain sectors.

For the sake of US aerospace firms, the Budget eliminated country-neutral duties on aircraft components and MRO inputs. In nuclear energy, zero customs duty on nuclear-generation equipment, absorber rods, and project imports were provided for all registered nuclear plants until 2035.

Lower barriers in clean energy, critical minerals, electronics, and health care, duty-free imports of capital goods for lithium-ion cell manufacturing and of sodium antimonate used in solar glass, zero duty on additional drugs, rare-disease medicines, and key medical-device components such as X-ray tubes and flat-panel detectors will ease access for US exporters.

Meanwhile, a few Budget announcements support Indian exporters.

“To address the concerns arising about utilization of capacities by manufacturing units in the Special Economic Zones due to global trade disruptions, I propose, as a special one-time measure, to facilitate sales by eligible manufacturing units in SEZs to the Domestic Tariff Area (DTA) at concessional rates of duty. The quantity of such sales will be limited to a prescribed proportion of their exports. Necessary regulatory changes will be undertaken to operationalise these measures while ensuring level-playing field for the units working in the DTA,” the Finance Minister said.

Several units in SEZs have been moving away to Domestic Tariff Area due to the duties. At a time when exports are reducing, sales in DTA will help SEZ exporters to manage their business.

Further, the Budget also has proposed to increase the limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1 per cent to 3 per cent of the FOB value of the previous year’s export turnover. The time period for export of final product from the existing 6 months to 1 year, for exporters of leather or textile garments, leather or synthetic footwear and other leather products. “This gives exporters more time to ship orders, reduces working-capital stress, and lowers the risk of penalties,” said GTRI.

Duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear, will be allowed to export shoe uppers as well.

The Budget also has removed the Rs 10 lakh per-consignment limit on courier exports, allowing MSMEs, artisans, and e-commerce sellers to ship higher-value goods through courier mode without shifting to slower and more complex air-cargo or containerised procedures, said Anil Bharadwaj, secretary general of FISME.

To ease e-commerce, the returns and rejects procedures in courier are being relaxed. To decongest the courier terminals and to improve the overall efficiencies and ease of import and export, the Courier Regulations are being amended to allow for return to origin, the Budget said.