Finance minister Nirmala Sitharaman will unveil the Budget 2021-22 on February 1 and it is expected that the government may tweak customs duties on several goods to promote domestic manufacturing and exports.
These goods include furniture raw materials, copper scrap, certain chemicals, telecom equipment and rubber products.
While import duties could be increased on more than 20 products such as cut and polished diamonds, rubber goods, leather garments, telecom equipment and carpet, the customs duties could be removed on select raw materials (like wood in rough, swan wood and hardboard) used for furniture manufacturing and copper concentrate.
"Expensive raw materials impact India's price competitiveness in the international market. The country's exports of furniture are very low (about one per cent), while countries like China and Vietnam are major players in the sector," sources said.
In 2020, the government had hiked import taxes on several products such as furniture, toys, and footwear.
Reduction in custom duties
Sources say that the Centre might possibly bring a reduction in customs duties on coal tar pitch and copper scrap. It may raise the levies on certain finished goods like refrigerator, washing machine and clothes dryer.
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To promote domestic manufacturing, measures such as production-linked incentives scheme (PLI) for several sectors including air conditioners and LED lights, could be introduced by the government.
"Tweaking of duties on these goods would help promote a self-reliant India campaign and boost domestic manufacturing," sources added.