Budget brings cheer to jewelry, electronics goods makers

Finance minister Nirmala Sitharaman on Tuesday proposed exempting customs duties on 25 critical minerals such as lithium, copper, cobalt, and rare earth elements, and reducing basic customs duty on two of them in what she said would “provide a major fillip to the processing and refining of such minerals.”

Sitharaman also said that the government would set up a Critical Mineral Mission to promote domestic production, recycle critical minerals, and acquire critical mineral assets overseas.

The minister, in her budget speech, said the mission’s mandate will include technology development, a skilled workforce, an extended producer responsibility framework, and a suitable financing mechanism.

Sharing the details of the government’s proposed plan to participate in the offshore mining of minerals, Sitharaman added that the government would launch the auction of the first tranche of offshore blocks for mining, building on the exploration already carried out.

Gems and Jewelry makers cheer

Bringing a cheer to gems and jewelry exporters, the government announced slashing import duty on gold and silver bars to 6% from 15%, on gold and silver dore to 5.35% from earlier 14.35%, and on Platinum, Palladium, Osmium, Ruthenium, and Iridium to 6.4%  from 15.4%.

Vipul Shah, chairman of Gems and Jewelry Export Promotion Council (GJEPC), told Press Insider, “Three special requests, including bringing down duty on gold silver to 6%, have been accepted by the government which will provide the necessary encouragement to the industry.”

“Lowering of duty will help the sector increase productivity and bolster the country’s exports,” he said.

The government has proposed that the 2% equalisation levy for e-commerce supply of goods or services shall no longer be applicable on or after 1 August, Shah said, adding that this was the second demand of the exporters. Equalization duty, a tariff or tax imposed on imported goods, brings their purchase cost to a level equal to that of domestically produced goods.

Shah said, “There was no duty on imports of rough diamonds. However, equalization duty prevented gems and jewelry firms from taking advantage of online auctions and bidding. So now, since the equalization duty has been eliminated, it will encourage rough diamond buyers to purchase diamonds in an online auction.”

Shah said that 14 out of 15 diamonds that are cut and polished globally, are done in India, adding that the government’s decision to provide safe harbor rates for foreign mining companies selling raw diamonds in the country would allow these companies to sell goods without facing the complex tax system.

Tariffs on phones

The Indian mobile phone industry has matured, with a threefold increase in domestic production and an almost 100-fold jump in exports over the past six years. In the interest of consumers, Sitharaman said, “I propose to reduce the BCD on mobile phone, mobile printed circuit board assembly (PCBA) and mobile charger to 15% from 20%.”

The government announced a 15% reduction in essential customs duty (BCD) on mobile phones, mobile chargers, and PCBA.

Pankaj Mohindroo, chairman of India Cellular and Electronics Association, said, “We would like to congratulate the government on this landmark budget. We are impressed with its intent and direction, which focus on enhancing manufacturing and export competitiveness.”

Mohindroo added that Sitharaman has also acknowledged the tremendous growth of mobile phone manufacturing and exports, adding: “We had recommended reducing BCD on mobile phones, their PCBA, and charger/adapter to 15%, which has been accepted.”

He further said that the proposal for tariff slab rationalization has also been acknowledged, and that the FM has announced that it will be taken up in the next six months.

Duty on telecom equipment

As part of the budget, the government has proposed to increase the BCD from 10% to 15 % on PCBA of specified telecom equipment.

Paritosh Prajapati, CEO of GX Group, said, “The emphasis on enhancing manufacturing and export competitiveness is highly praiseworthy. “

Prajapati added that the Finance Minister’s acknowledgment of the remarkable growth in telecom equipment manufacturing and exports highlights our dedication. The increased BCD on PCBA for telecom equipment supports local manufacturers and lowers costs for Telco OEMs.

He said, “This development will invigorate the industry with renewed energy and confidence.”

No exemption on solar glass

Stating that the energy transition is critical in the fight against climate change, Sitharaman said, “In view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them.”

She added that to support the energy transition, the finance ministry has proposed expanding the list of exempted capital goods for use in the manufacture of solar cells and panels in the country.