Budget 2023: Key Customs Duty Changes to Impact Consumer Goods and Strategic Sectors

Finance Minister Nirmala Sitharaman's Budget 2023 proposes significant changes in customs duties to make various consumer goods cheaper and to support strategic sectors. Key changes include reductions on mobile phone parts, certain cancer medicines, and increases on items like ammonium nitrate and telecommunication equipment.

One major highlight of Budget day revolves around identifying which products become cheaper and which cost more. As part of her Budget presentation, Finance Minister Nirmala Sitharaman announced several changes to basic customs duty (BCD) targeting key manufacturing items.

During her Budget speech, Sitharaman revealed exemptions on customs duty for specific cancer treatments and reduced duties on mobile phone components and chargers. "With domestic mobile phone production tripling and exports surging nearly 100 times over the past six years, the sector has matured," she noted. "To benefit consumers, I am reducing BCD on mobile phone components and chargers to 15 per cent," Sitharaman said in her 90-minute address.

Additionally, three more cancer medicines will be fully exempt from customs duties. Duties on imported gold, silver, leather goods, and seafood have also been lowered. Reducing gold tariffs aims to boost retail demand and curb smuggling in the world's second-largest bullion market. "To promote domestic value in gold and jewellery manufacturing, BCD on gold and silver is reduced to 6 per cent, and platinum to 6.4 per cent," she added.

Modifications were also proposed on X-ray machine components under the Phased Manufacturing Programme to align with domestic capabilities. Sitharaman announced full exemptions on customs duties for 25 critical minerals like lithium and cobalt, essential for sectors such as nuclear energy and high-tech electronics, with reduced BCD on two others. "This will enhance mineral processing and refining, ensuring their availability for strategic sectors," she stated.

Focusing on energy transition to combat climate change, Sitharaman proposed extending exemptions on capital goods used in solar panel manufacturing while maintaining duties for solar glass and tinned copper interconnect due to domestic capacity. Marine product competitiveness would improve with a reduced duty on select broodstock and fish feed, and duty exemptions on various shrimp feed inputs.

The Budget also includes duty cuts for leather, textile sectors, and materials like ferro nickel and blister copper, crucial for steel and copper production. "Duties on ferrous scrap and nickel cathodes will remain zero, and concessional BCD of 2.5 per cent on copper scrap stays," Sitharaman confirmed. Conversely, duties on chemicals and telecommunication equipment like PCBAs saw increases. PVC flex banner duties are also set to rise from 10 to 25 per cent to curb their hazardous environmental impact.

Sitharaman clarified that the customs duty adjustments aim to bolster domestic manufacturing, encourage value addition, enhance export competitiveness, and simplify taxation, prioritizing public and consumer interests.