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Finance Minister's Speech - Part B
120. I propose to bring the service provided to lease circuit line holders also in the tax net.

121. I now turn to my proposals relating to customs duties.

122. In my previous budgets, I have reduced the total number of major customs duty rates to four, that is, 35%, 25%, 15% and 5%. I do not wish to propose any further reduction in the number of customs duty rates this year. However, I propose to discontinue the surcharge of 10%. With this, peak level of customs duty will decline marginally from 38.5% to 35%.

123. All agricultural produce already attracts the peak rate of duty of 35% or more. Current tariffs on major cereals are: Wheat (50%), Rice (70%/80%) and Maize (50%). I now propose to increase the customs duty on tea, coffee, copra, and coconut and desiccated coconut from the present 35% to 70%.

124. Similarly, I propose to increase the rate of duty on crude edible oils ranging from 35% to 55% at present to a uniform rate of 75% and on refined oils from 45%/65% to 85%. A lower rate of 45% would apply to soyabean oil on account of WTO binding. I also propose to enhance the rate of customs duty on the import of crude palm oil by vanaspati manufacturers from 25% to 55% and restrict this concession to sick vanaspati units only. The others will pay 75%. I wish to assure the House that in order to safeguard the interest of our farmers we shall move swiftly whenever any perceptible threat on account of imports is noticed.

125. The House is aware that Government has committed itself to abolish customs duty on IT and telecom products and their inputs and components under the ITA 1 Schedule by 2003. The customs duty on these products is proposed to be reduced to 15% from 1, March 2001 from current levels.

126. Mr. Speaker, Sir, with the abolition of the remaining Quantitative Restrictions in April this year second hand cars will also become freely importable. To allay the fears of surge in import of second hand cars, the rate of basic customs duty on their import will be raised to 105%, which is three times the peak rate. The total duty now applicable to second hand cars will be more than 180%. I propose a similar structure of duty for the import of old multi utility vehicles, scooters and motor cycles.

127. In order to provide a level playing field for domestic liquor producers, I propose to levy CVD at a suitable rate on imported liquor, taking into account the levies of state excise on domestic production.

128. Our textile industry has to modernize itself and acquire the latest technology in order to face global competition and attain high quality of production. I propose to reduce the basic customs duty on specified textile machines, including shuttle-less looms, from 15% to 5%. As a measure of further relief to the textile sector, I propose, to reduce the customs duty on silk waste, cotton waste and flax fibre from 35% /25% to 15%.

129. There are some cases of anomaly in customs duty between raw materials and intermediate goods on the one hand, and intermediate goods and final products on the other. DMT, PTA, MEG and Caprolactum are raw materials for production of man-made fibers and yarns. However, the customs duty on these materials is higher than the rate applicable to fibers and yarn. I propose to reduce the customs duty on DMT, PTA, MEG and Caprolactum from 25% to 20%, which is the WTO bound rate for synthetic fibers and yarns. Similarly, soda ash is an input for the production of glassware, detergents etc. and currently attracts the peak customs duty of 35% along with the final products. I propose to reduce it to 20%. I also propose to reduce the customs duty on polyester chips and nylon chips for the manufacture of fibers and yarns from 35% to 25%.

130. On the same analogy, the customs duty on high quality DBM, seawater magnesia and fused magnesia is being reduced from 25% to 15%.