Restore duty free import of export inputs: Commerce ministry to finmin

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SME Times News Bureau | 15 Mar, 2021
The Commerce Ministry has written to the Finance Ministry for immediate restoration of duty free import of export inputs used by the garment, leather and handicrafts sectors. Removal of the duty free status in the Budget 2021-22 has impacted exports worth Rs 5,000 crore.

The Budget 2021-22 proposed customs duty ranging from 7.5 to 15 per cent on several items with the aim of creating a level playing field for the benefit of farmers, MSME and other domestic manufacturers. However, changes have also scrapped an earlier provision of duty free imports of export inputs with effect from March 31, 2021.

Sources said that the finance ministry is considering the request put forward by the commerce department but no decision has been taken yet. If such changes are permitted, the finance minister may announce the same while getting the budget passed by Parliament.

In the letter to the finance ministry, the commerce department has requested to consider restoring the provision of duty free import concerning essential embellishment, trimmings tools and other consumables such as glue, polish, veneers, button, velcro, chatan, badges, beads, sewing thread, motif, hinges, wire rolls, hooks, rivets and certain electric parts used by the industry.

Under a custom notification of June 2017, such items got duty free import benefit to help the export oriented industries become competitive. Sources said the commerce department has estimated that scrapping of the provision may badly impact exports of Rs 5000 crore by small exporters and lead to unemployment.

Earlier, several export promotion councils have represented with the commerce ministry for immediate restoration of duty free status of export inputs as apart from adding cost to the exporters the withdrawal of benefits would have also hampered the quality and looks of exported items and resulted in cancellation of orders.

The majority of items allowed qualifying earlier for duty free imports are not manufactured in India. Besides, certain such foreign items are specified by overseas buyers to be used in the products to be exported to them for maintaining quality standards.