The increase in import duty on bamboo for agarbatti (incense stick) to 25 percent is expected to boost employment prospects in the sector, according to the Khadi & Village Industries Commission (KVIC).
Central Board of Indirect Taxes and Custom (CBIC) had earlier announced that Customs duty on bamboo imports by agarbatti manufacturers hiked from 10 per cent to 25 percent with immediate effect to encourage use of domestic bamboo for Atmanirbhar Bharat.
The 25 percent customs duty rate would uniformly apply to any import of bamboo, including those by traders. Uniform rate will help in avoiding misuse and rates related disputes, the board said.
"This measure will benefit farmers immensely. MSME agarbatti manufacturers also to gain, as earlier only the large agarbatti manufacturers were able to import bamboo at lower rate," it said.
India annually imports about 1.10 lakh tonnes of finished raw agarbatti and round bamboo sticks of about 40,000 tonnes. The customs duty on raw agarbatti was 20 percent and 30 percent on round bamboo sticks.
However, the Centre brought duty on raw agarbatti to zero and a concessional duty of 10 percent is applied to round bamboo sticks imported from China, which affected local industries. Size of domestic agarbatti industry is over Rs 6,000 crore.
"The decision assumes great significance as heavy import of bamboo sticks from China and Vietnam caused huge employment loss in India. This decision will pave the way for setting up of new agarbatti stick manufacturing units to meet the ever-growing demand of Agarbatti in India," KVIC said.
In monetary terms, the import of raw agarbatti in India increased exponentially from Rs 31 crore in 2009 to Rs 546 crore in 2019 due to reduction of import duty in 2011 from 30 percent to 10 percent, it added.
"This hit the Indian agarbatti manufacturers hard and resulted in closure of nearly 25 percent of the total units," KVIC said.
On request of KVIC, the Ministry of Commerce on August 31, 2019, placed the import of raw agarbatti under "Restricted" category.Follow our coverage of the coronavirus crisis here