India’s Union Budget 2022- Impact on Imports

Ms.Susanajoy, Asst.Professor, SIMS

On 1^st Feb 2022 India proposed a new custom duties and tariffs on commodities imported from global countries in Union Budget 2022. Decrease in  customs duty on cut and polished diamonds to 5% and some changes are done which affect the trade of commodities in the future.  Herein the  key highlights of budget 2022 and products on which customs duties have changed and a list of goods that will become cheaper and costlier.

Finance Minister,at the time of proposing  the Union Budget, conveyed that the country is expected to grow at 9.27% in the coming year. With a crisp on four pillars of development – climate action, energy transition, productivity enhancement, and inclusive development; the budget gives a blueprint of the economy from India at 75 to India at 100. 

Cut & polished diamonds, gems to be reduced to 5%

Import duty on cut and polished diamonds and gemstones will be reduced to 5% and shows nil change in sawn diamond to boost the sector. Current  import duty on cut and polished diamonds as well as gemstones is 7.5%. In 2021, India imported cut & polished diamonds worth US$ 7,097 million.

Steel Scrap – Exemption

There is a proposal to continue the customs duty exemption on steel scrap for one year, For providing relief to the secondary steel producers in the MSME sector.

Raise in imitation jewellery – discourage  imports

An increase in customs duty on imitation jewellery at the rate of Rs 400 per kg, for discouraging the dumping of cheap quality jewellery by importers in Indian Market.   India imported imitation jewellery worth US$ 25.3 million in 2021.

Reduction on methanol

One more proposal is laid to reduce customs duties on certain chemicals, including methanol, in order to promote indigenous manufacturing.  India’s imports of methanol valued US$ 1,702 million in 2021.

Phone Chargers, transformers, parts gets duty concessions

There is a raise in Phones and phone chargers as exemptions on certain parts have been withdrawn to encourage domestic manufacturing. Certain parts of phones will move from a nil rate to 2.5%.

Solar inverters and lanterns could get costlier as customs duty has been increased to 20% from 5% on solar inverters and to 15% from 5% on lanterns.

Budget 2022 –  Cheaper, Costlier

Cheaper

smart watches, Chargers and cameras for phones, Gemstones and diamonds, Hearing aids, Farming tools and smart meters, Frozen mussels and squids, Cocoa beans and asafetida, Chemicals for petroleum refining, Steel scraps.

Costlier

Imported items like auto parts & steel screws (customs duty raised to 15%), Jewellery (Imitation), Speakers, headphones and earphones, Umbrellas, Unblended fuel, X-ray machines.

The budget estimates the effective capital expenditure of the Central government at Rs 10.68 lakh crore in 2022-23, making up about 4.1 per cent of the GDP. The gross GST collections for the month of January 2022 are Rs 1,40,986 crore — the highest since the inception of the tax in 2017.