Published on Mon, Mar 19, 2007 at 08:42 | Source : Moneycontrol.com
Updated at Mon, Mar 19, 2007 at 09:49
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Inverted duty structure hits many products: FICCI
The inverted Customs duty structures proposed in Budget 2007-08, will badly affect 20 key industrial products and Indian manufacturers would be hit hard because of the various free trade agreements, or FTAs allowing zero duty imports from FTA partner countries, according to a survey carried out by FICCI.
The inverted Customs duty structures proposed in Budget 2007-08, will badly affect 20 key industrial products and Indian manufacturers would be hit hard because of the various free trade agreements, or FTAs allowing zero duty imports from FTA partner countries, according to a survey carried out by FICCI.
Inverted duty structure refers to an anomalous situation where the duty on the finished product is lower than that on raw materials and intermediate products.
This acts as a disincentive for the domestic manufacturer who has to pay higher price for the raw material while the finished product is imported at lower duty.
Though the peak Customs duty has been brought down to 10% to align it with Asean levels, the steep reduction of import duty due to commitments made under bilateral trade agreements signed by India with countries such as Thailand, Singapore and Sri Lanka has widened the duty differentials, resulting in the difficulties being faced by the industry, the survey report said.
This acts as a disincentive for the domestic manufacturer who has to pay higher price for the raw material while the finished product is imported at lower duty. 
