The Indian government has withdrawn the excise duty concessions on a number of items including those in the electronics and automotive sectors, which were covered under Chapters 84 and 85 of the Schedule to the Central Excise Tariff Act. This change is effective from January 1, 2015. From the effective date, the excise duty will be 12 per cent.
By Gunjan Piplani
It was in February 2014 that the previous government had reduced excise duty from 12 per cent to 10 per cent in its interim budget on items covered under Chapters 84 and 85. The 2 per cent concession was aimed at reviving the electronics industry. This step, which has ostensibly been taken to address the challenge of the fiscal deficit, is indeed a setback to the electronics industry’s growth.
According to Rajoo Goel, secretary general, ELCINA, “We are surprised at reports that the excise duty concessional rate of 10 per cent on electrical and electronics products for Chapters 84 and 85 has not been extended beyond December 31, 2014. The industry has repeatedly requested that this rate should be continued till such time as GST is implemented. The only exception is probably the component manufacturers, who use inputs that are not covered under Chapters 84 or 85.
ELCINA feels that the reduction has helped support domestic manufacturing and must be continued till the new tax structure under GST comes into force. With our focus on the ‘Make in India’ campaign, it is important that the government continues to provide this benefit by notifying the lower rate of 10 per cent for items covered under Chapters 84 and 85, as this will help sustain manufacturing in the ESDM sector till a more friendly tax regime under GST comes into place.”