To rectify the inverted duty structure affecting various manufacturing sectors, Finance Minister Nirmala Sitharaman announced a reduction in customs duty on a range of input materials during the Union Budget 2024 presentation on Tuesday. The reduction includes critical minerals, electronics, chemicals, and precious metals such as gold and silver.

Sitharaman emphasized that the government aims to boost labor-intensive sectors and will conduct a comprehensive review of the rate structure over the next six months to simplify and rationalize it for ease of trade.

To enhance the competitiveness of exports in the leather and textile sectors, Sitharaman proposed reducing the Basic Customs Duty (BCD) on real down filling material from duck or goose. Additionally, she announced the reduction of BCD on Methyl Diphenyl Isocyanate (MDI), a crucial component in the manufacture of spandex yarn, from 7.5 percent to 5 percent to correct the duty inversion.

“I am also making additions to the list of exempted goods for the manufacture of leather and textile garments, footwear, and other leather articles for export,” Sitharaman stated.

Furthermore, she proposed the simplification and rationalization of the export duty structure on rawhide, skin, and leather.

Despite these measures, the Confederation of Indian Textile Industry (CITI) highlighted the need for bold steps to address stagnation in the textile and apparel industry. Rakesh Mehra, Chairman of CITI, noted, “MSMEs account for about 80% of the Indian Textile Industry. The credit assurance schemes announced today will provide the much-needed impetus to the growth of a large number of textile and garment MSMEs, enabling them to expand their operations and innovate.”

Source:Ministry of Finance, India