The Economic Survey Report 2023 emphasized that Basic Customs Duty (BCD) rate on Mobile Phones, TV, and Batteries need to be calibrated to deepening of Domestic Value Addition.
The Customs duty rate structure has been guided by a conscious policy of the government to incentivise domestic value addition under Make in India and Aatmanirbhar Bharat initiative, which envisages imposition of lower duty on raw materials and providing reasonable tariff support to goods being manufactured in India.
The customs duty structure has been calibrated to incentivise investment in key areas like petroleum exploration, electronic manufacturing, etc. By this policy, the MFN rates of BCD have been increased in recent years on such items which are being manufactured in India or which domestic industry aspires to manufacture.
During the last 6 years, about 4000 tariff lines (approximately 1/3rd of total tariff lines) have seen upward calibration of BCD. Such items include metals, metal products, auto parts, footwear, fabrics, garments, specified chemicals, toys, certain machinery, medical equipment, several MSME items like bells, gongs, ceramic wares, tableware, utensils, hardware etc, consumer electronics and home appliances including mobile, TV, refrigerators, washing machine, AC, fans, heaters, hair dryers, shavers, toasters, ovens etc. At the same time, the duties of inputs and raw materials have been rationalised.
It can be viewed that Phased Manufacturing Plan (PMP) in respect of significant products like mobile phones, and other electronic goods like TVs, electric vehicles, batteries, solar panels etc- The BCD rates in respect of different stages of the value chain of these products are calibrated in a manner that encourages gradual deepening of domestic value addition. For example, in respect of mobile phones, initially, the parts were placed under nil BCD while duty was imposed on mobiles. Gradually, duty has been raised on parts in a phased manner as their production began in India.
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