Government to Address Inverted Duty Structure to Boost Domestic Manufacturing

The Indian government is planning to tackle inverted duty structures on products like paper, furniture, and washing machines to enhance domestic manufacturing. The Commerce and Industry Ministry has sent recommendations to the Finance Ministry following consultations with industry groups. This move aims to boost competitiveness and promote exports.

The government is likely to consider addressing the issue of inverted duty structure for certain products like paper, furniture, washing machines, solar glass, and air purifiers to promote domestic manufacturing, an official has said.

Inverted duty structure refers to taxation on inputs at higher rates than finished products that result in the build-up of credits and cascading costs.

The official said the Commerce and Industry Ministry has shared a list of products with the Finance Ministry to look at the inverted duty structure issues.

The list was shared after holding detailed consultations with industry associations and export promotion councils.

''We have already sent the list to the Finance Ministry. The list includes products such as paper, furniture, washing machines, solar glass, air purifiers, and some cases in apparel and jewellery also,'' the official said.

Inverted duty structure impacts the domestic industry, as manufacturers have to pay a higher price for raw materials in terms of duty, while the finished products land at lower duty and cost.

Expensive inputs make products costly and cannot compete in the export market. In the domestic market, such products are prone to cheaper imports.

Addressing this duty issue would help the competitiveness of domestic exporters and that, in turn, will help increase shipments and promote manufacturing.