New Delhi, Jan 20 (PTI) India needs to simplify its customs duty structure by cutting the actual number of duty slabs, instead of only tweaking the basic customs duty (BCD) rates, to promote ease of doing
business, think tank GTRI said on Tuesday.
In its pre-Budget suggestions, the Global Trade Research Initiative (GTRI) said that while the last Budget reduced the number of ad valorem BCD rates to eight, this reform excluded the large number of specific duties, mixed duties, and conditional rates, which continue to create hundreds of effective tariff slabs in practice.
Further, part of the BCD was shifted to the Agriculture Infrastructure and Development Cess (AIDC) to show a lower slab count on paper while keeping the total import duty unchanged, undermining the stated reform objective, the think tank said.
Since importers also pay AIDC, Social Welfare Surcharge, and health cesses, the real tariff structure is far more complex, it said.
“India should therefore consolidate all duties into a small number of transparent slabs based on total import duty, not just BCD,” GTRI founder Ajay Srivastava said.
He said that as India is pursuing deeper manufacturing, export diversification and supply-chain integration amid global trade fragmentation and rising protectionism, an outdated tariff structure and process-heavy customs system risk undermining these objectives.
Customs tariff and process reforms sit at the core of India’s economic architecture, Srivastava said, adding that with nearly 29 per cent of GDP flowing through Customs and merchandise trade exceeding USD 1.16 trillion, even small inefficiencies now impose high economy-wide costs, raising input prices, delaying shipments, weakening export competitiveness and deterring investment.
“India must simplify its customs duty structure by reducing the actual number of duty slabs rather than merely the BCD rate slabs,” he suggested.
GTRI has also suggested using simple language in customs notifications; publishing all import duties in a single, clear schedule; creating a searchable online database of customs tribunal decisions; and conducting a zero-base audit of customs rules and procedures.
India must undertake a comprehensive, product-by-product overhaul of customs tariffs to make trade policy support manufacturing and exports, he said.
“Customs duty today contributes only 6 per cent of India’s gross tax revenue and equals just 3.9 per cent of the value of imports, showing that tariffs have lost their relevance as a revenue instrument,” he said. PTI RR RR BAL BAL
