INDIA: Import Duty Hiked on Textile and Electrical Items

The country’s 2021 Union Budget has increased import duties on a wide range of goods as the government looks to promote and boost domestic manufacturing. With many of these customs duty changes having taken effect from 2 February 2021, full details can be found on the Union Budget website under “Customs Notifications”. 

Among the key products affected are such appliances as air conditioners and refrigerators; auto parts; power banks; mobile phones; toys; spandex fibre; raw silk; certain iron and steel products; various chemicals; solar lanterns; and LED lights. In more specific terms, refrigerator/air conditioner compressors are subject to 15% customs duty (up from 12.5%), while LED lights and associated components, such as printed circuit boards, will now be liable for duty of 10% (up from 5%). 

Also affected by the move are garments, textiles and footwear. Most notably, cotton, which was previously zero-rated, is now subject to duty of 10% duty. In addition, certain chemicals used in the manufacture of spandex yarn, such as methylene diphenyl isocyanate (MDI), shift from being zero-rated to carrying a 7.5% tax liability, while finished leather products are to now incur a 10% surcharge. 

Neither have a number of other product categories been spared, with imported auto parts (including ignition wiring sets, signalling equipment parts and safety glass) now liable for duty of 15% as opposed to the 7.5%-10% previously payable. In addition, a duty of 2.5% has been imposed on a range of technology products, including certain mobile phone parts; power banks; inputs/raw materials for lithium-ion batteries; ink cartridges, and ink spray nozzles. 

There have also been some cuts in duty, mainly with regard to manufacturing materials. This has seen duty on gold/silver fall to 7.5% from 12.5% and on platinum/palladium fall to 10% from 12.5%. At the same time, duty on nylon fibre has been cut from 7.5% to 5%, while duty on copper scrap is down from 5% to 2.5%. In the case of steel scrap, this is to remain duty exempt until 31 March 2022.