Rebate on import duty may increase
Amidst the ongoing tension in West Asia and supply-related challenges, the government is considering continuing the relief given on import duty on 40 essential products even after June 30. The final decision will be taken considering the situation in the sector, impact on government earnings and availability of supplies. The government had temporarily reduced customs duty on many essential petrochemical products to zero from April 2. This relief is applicable till June 30. Its objective was to protect domestic industries from rising prices of raw materials and supply problems.
The products on which duty has been exempted include chemicals like methanol, anhydrous ammonia, toluene, styrene, dichloromethane, vinyl chloride monomer, poly butadiene, styrene butadiene and unsaturated polyester resin. They are used extensively in plastic, packaging, textile, pharma, chemical, auto parts and other manufacturing sectors.
Government will assess the revenue
PTI quoted government officials as saying that before taking a decision on extending the duty exemption, the impact on revenue i.e. government earnings will also be assessed. Besides, the situation in West Asia and cargo movement through the Strait of Hormuz will also be reviewed. In recent months, import costs of crude oil, food products and fertilizers have increased due to increased conflict in West Asia and disruption of shipping movements in the Strait of Hormuz. Apart from this, the supply of raw materials essential for many industries has also been affected.
The government has set the target of customs collection in the current financial year at Rs 2.71 trillion, which is more than Rs 2.64 trillion in the last financial year. In such a situation, striking a balance between extending relief and government income will be an important challenge for the government. If the discounts continue, the costs of many industries may remain low, the benefits of which may ultimately be passed on to consumers.
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