The Budget proposal to remove customs duty exemptions on 400 items is not aimed at generating additional revenue or support local manufacturing, but to make customs system more efficient and avoid discretionary decision-making practices, says Union Finance Secretary Ajay Bhushan Pandey.
In an interaction with BusinessToday.In, Pandey said that the exemptions on these items have far outlived their purpose. "When we say 400 items, each item comes with some end use conditions. Who is going to verify these conditions? Customs people are there at the borders. Who is going to see if these conditions are followed or not? That is where discretion comes in," says Pandey.
According to him, such imports should be there as long as the situation demands. "But if you are going to continue that for 30 or 40 years, there is no justification. the question is, is that an exception? That is the kind of review that is taking place," he adds.
The government hopes that by reducing distortions and making systems more efficient, they will be removing the chances of 'inspector raj'.
In her Budget speech, Finance Minister Nirmala Sitharman had said that India's custom duty policy should have the twin objective of promoting domestic manufacturing and helping India get onto global value chain and export better.
"The thrust now has to be on easy access to raw materials and exports of value added products. Towards this, last year, we started overhauling the customs duty structure, eliminating 80 outdated exemptions", the minister had pointed out.
She also proposed to review more than 400 old exemptions this year. "We will conduct this through extensive consultations, and from October 1, 2021, we will put in place a revised customs duty structure, free of distortions. I also propose that any new customs duty exemption henceforth will have validity up to the March 31 following two years from the date of its issue," she had announced.