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India revamps tariff rates to encourage domestic manufacturing

February 1, 2022
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Why this is important to Wisconsin businesses: Wisconsin exporters should be aware of changes that may affect their future dealings with customers in India.

India is raising import fees on a wide range of products—from headphones to fertilizers. The goal: to stimulate manufacturing and generate more jobs after the two-year pandemic slump.

The 2022-23 fiscal year budget presented in February proposes phasing out customs fee exemptions on more than 350 items, including chemicals, fabrics, medical devices and medications—products where enough manufacturing capacity already is available in India.

Finance Minister Nirmala Sitharaman said duty exemptions granted to capital goods in various sectors such as power, fertilizers and textiles—some of which have been in effect for more than 30 years—have hindered the growth of the domestic capital goods industry. She said import duty concessions also have deprived local producers of a level playing field in areas that include coal mining and power generation.

Duty fees are being raised on items that include headphones, smart meters, solar cells, umbrellas and imitation jewelry. However, import charges were reduced for products such as cut and polished diamonds and cocoa beans, according to the Indian Express.

Exemptions for advanced machinery and raw materials that are not manufactured in India also will continue, and fee reductions are being introduced on certain components, such as specialized castings and mobile phone charger parts, as well as on chemicals used to refine petroleum. A customs duty exemption given to scrap steel in 2021 is being extended for another year to help secondary steel producers.

Wisconsin companies exporting advanced machinery and certain raw materials will continue to get duty concessions. Also, Wisconsin companies with products that can boost India’s manufacturing capacity will likely see favorable tariff rates.

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