Rationalisation of custom duty slabs to eight from 15 in the 2025 Budget by moving items to lower duty rates will cost the nation Rs 1,900 crore, said Central Board of Indirect Taxes and Customs chairman Sanjay Kumar Agarwal in an interview with Moneycontrol.
“The slabs at 150%, 125% and 100% have been eliminated and brought down to 70%. Similarly, slabs at 40%, 35%, 30% and 25% have been eliminated and brought down to 20%,” CBIC chairman noted.
The CBIC chairman highlighted that the government has also tried to address the fact that there is no major shock to the industry due to rate reduction.
“Whatever differential got created has been plugged by imposing an equivalent amount or slightly lower Agriculture Infrastructure and Development Cess,” CBIC chairman said.
The government is expected to collect Rs 2,35,000 crore from customs in FY25, which is expected to rise to Rs 2,40,000 crore in FY26.
The loss from cess is likely to be only 0.8 percent of the customs collection.
Agarwal also noted that by this exercise the government has tried to address the bad optics around high rates in India.
“Perception that India has very high tariffs, that has been corrected. It has resulted in the average customs rate coming down to 10.66 percent from 11.65 percent earlier,” he pointed out.
Tariff and trade disruptions
On the issue of trade wars and rising tariffs, the CBIC chairman noted that India will address those situations when they arise but was also quick to point out that most imports from the US attract less than 10 percent tariff.
“The major items imported from the USA–top 30 items we have analysed—attract very low rates between 0-10 percent. The maximum import is of crude oil, and that is almost a negligible rate,” said CBIC chairman.
A Moneycontrol analysis had found that 80 percent of US imports in India attract less than 20 percent tariff.
The US has started trade wars with China, Canada and Mexico. The US president, fulfilling his promise on the campaign trail, imposed 25 percent tariffs on Canada and Mexico imports, with both countries levying retaliatory tariffs.
It also imposed 10 percent tariff on China, which the country responded with limited tariffs on February 4.
Mexico and Canada have got a month’s breather as they have stuck last-minute deals on February 3.
