Customs duty on bamboo raised to encourage domestic bamboo use

The Central Board of Indirect Taxes and Customs (CBIC) on Tuesday raised the customs duty on bamboo used in making agarbatti to encourage use of domestic bamboo and to support growers.

CBIC said in a notification that customs duty on bamboo import has been raised from 10% to 25% with immediate effect as part of the government’s efforts to encourage self-reliance. The 25% customs duty will uniformly apply to any import of bamboo, including by traders, CBIC said in a tweet informing the tariff change notified on Tuesday.

“Uniform rate will help in avoiding misuse and rate-related disputes. This measure will benefit farmers immensely,” CBIC said.

Although the tariff hike applies to only one commodity, it signals the government’s intention of using tariffs where possible to give domestic production an edge at a time the economy is struggling to return to normalcy after the national lockdown which wiped out two months of revenue for businesses. The economic package the government announced to support the poor and businesses to tide over the coronavirus crisis relied heavily on providing liquidity and on reforms that could yield results in the medium to long term.

“Reliance on customs duty will give an edge to domestic economy especially when countries like US and China are also inward looking,” said Rajat Mohan, senior partner at chartered accountants firm AMRG & Associates.

The move is in line with the philosophy that finance minister Nirmala Sitharaman adopted in her last two budgets—lowering tariffs on capital goods and raw materials to encourage domestic manufacturing of goods while withdrawing duty benefits on finished products which will give an edge to locally produced items. The government also offers tax relief to new investments in manufacturing.

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