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Importers ask FM to reduce specific import duty in line with ad valorem rate

The textile industry is not very happy with the reduction in the import duty on textile items, announced in the recent mini-budget. Reena Mital reports.

According to a number of importers, the finance minister has only reduced the ad valorem rate of duty on certain products, keeping the specific rates of duty unchanged. “Although the ad valorem rates of duty have come down from 30 and 35 per cent to 20 per cent, there has been no proportionate reduction in the specific rates of duty,” said sources. “Since specific rates of duty were worked out in 2000-01 with reference to the then prevailing rate of duty and since it is the policy of the government to reduce the rate of import duty to the peak level of 20 per cent, it follows by way of corollary that proportionate reduction must be done in the rates of specific duty also. This has not happened,” they added.

According to them, the government’s move of reducing only the ad valorem rates of duty is probably to protect the local industry. “While we do not say that this is incorrect, there are other mechanisms to protect the industry. And even the local industry has to import its requirements, so reducing import duties would only make it more competitive, if the specific rates are also reduced,” they opine.

The industry is in the process of making a representation to the finance ministry in this regard. “We will be sending out a memorandum to the finance minister, the revenue secretary, chairman of the Central Board of Excise and Customs, the textiles minister, textiles secretary, joint secretary (textiles) and the textile commissioner. “We have spoken to some of these officials, but the response has been quite lukewarm,” they stated.

The ad valorem rate of duty on items under Chapter 51 during 2000-01 was 30/35 per cent, Chapter 52 attracted a 30-35 per cent rate of duty, Chapter 54 25-30 per cent, Chapter 55 30-35 per cent, Chapter 57 35 per cent, Chapter 58 25-35 per cent, Chapters 61-63 35 per cent. These have all been brought down to 20 per cent.

The industry, in its representation is requesting the government to take necessary steps for realignment of specific rates of duty in tune with the rates of ad valorem duty.