A leg-up to the leather and footwear industry.

I SHALL begin with my proposals on indirect taxes.

Lower peak rate: I intend to advance the Government's declared policy of making the Customs duty structure closer to that of our East Asian neighbours.

Therefore, I propose to reduce the peak rate for non-agricultural products from 20 per cent to 15 per cent.

Consistent with the peak duty rate, I propose to bring down the Customs duty rates on capital goods and raw materials as well as correct any inverted duty structures.

Engineering: In order to promote investment, I propose to reduce the Customs duties on selected capital goods and parts thereof to below 15 per cent, to 10 per cent in some cases and to 5 per cent in some others.

For most textile machinery, I propose to reduce the duty from 20 per cent to 10 per cent, in order to help the textile industry acquire a competitive edge in the post-quota regime.

Similarly, to encourage the food processing industry, I propose to reduce the duty on refrigerated vans from 20 per cent to 10 per cent.

Leather: To give a leg-up to the leather and footwear industry, I propose to reduce the Customs duties on seven specified machinery from 20 per cent to 5 per cent.

The duty on ethyl vinyl acetate (EVA), an input for the footwear industry, is also proposed to be reduced from 20 per cent to 10 per cent.

Pharma and biotech: Pharmaceuticals and biotechnology are sunrise sectors. I propose to reduce the Customs duty on nine specified machinery used in these two sectors to 5 per cent.

I also propose to reduce the Customs duties on specified parts of battery-operated road vehicles and for printing presses from 20 per cent to 10 per cent.

Metals: For primary and secondary metals, I propose to reduce the Customs duties from 15 per cent to 10 per cent. Similarly, industrial raw materials such as catalysts, refractory raw materials, basic plastic materials, molasses and industrial ethyl alcohol, which are key inputs to manufacture, will now be liable to a reduced Customs duty rate of 10 per cent. On lead, I propose to reduce the duty to 5 per cent.

Coking coal with high ash content attracts a duty of 15 per cent. I propose to bring the rate down to 5 per cent.

Textiles: Keeping in mind the crucial need to encourage the textile sector, the Customs duty rates on polyester and nylon chips, textile fibres, yarns and intermediates, fabrics, and garments are proposed to be reduced from 20 per cent to 15 per cent.

IT/telecom: The electronics and telecom sectors merit special attention. On 217 Information Technology Agreement (ITA) bound items, the duty is required to be brought down to nil. Consequently, to provide a level-playing field to the domestic industry, I propose to remove the Customs duty on specified capital goods and all inputs required for the manufacture of ITA bound items.

Countervailing duty: I intend to take the power to impose a countervailing duty (CVD) of 4 per cent on all imports to compensate for the State level taxes, in particular the forthcoming State level VAT that is proposed to be imposed on corresponding domestic goods.

For the present, I propose to levy a CVD of 4 per cent only on the imports of ITA bound items and their inputs that attract nil duty. Credit for the CVD will be available against payment of excise duty. However, because we have a soft corner for these wares, IT software will be exempt from the proposed CVD.

Agricultural goods: I do not propose to make any changes in the Customs duties applicable to agricultural goods. In fact, I have decided to increase the duty on cut flowers from 30 per cent to 60 per cent. However, at the request of the trade, and since there is little domestic production, I propose to reduce the duty rate on cloves to 35 per cent.

Drink clean water: In order to encourage the import of technology to produce pure drinking water, I propose to reduce the import duty on atmospheric drinking water generators from 20 per cent to 5 per cent.

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