Centre raises customs duty on auto parts to support local manufacturing

With an eye on supporting domestic manufacturers, the government on Monday proposed an increase in customs duty on certain imported components used in automobiles.

In the Budget 2021-22, Finance Minister Nirmala Sitharaman proposed increase in customs duty of various parts including ignition wiring sets, safety glass and parts of signalling equipment to 15 per cent with effect from February 2.

Currently, the parts attract customs duty in the range of 7.5-10 per cent.

"We are raising custom duty on certain auto parts to 15 per cent to bring them on par with general rate of auto parts," Finance Minister Nirmala Sitharaman said in her Budget Speech.

The government said the changes in basic customs duty is for creating level-playing field for the benefit of micro, small and medium enterprises (MSMEs) and other domestic manufacturers.

The parts would also attract agriculture infrastructure and development cess at the rate of 5 per cent.

Automotive Component Manufacturers Association President Deepak Jain said, "Increase in basic customs duty on select auto components will encourage local manufacturing of such items."

It is also heartening that the Budget outlay for the MSME sector has been doubled compared to last year, he added.

"The auto component industry is dominated by MSMEs and this will provide them the necessary succour as the industry recovers," Jain said.