Budget Highlights* – *Basic Custom Duty (BCD)*

*Shrimp industry*

1/ A new dedicated tariff item 0306 36 20 for Live *Litopennaeus vannamei shrimp* with a standard rate of duty of 10% is being inserted with effect from 01.05.2022.

2/ BCD on *Live Black tiger shrimp* (Penaeus monodon) (heading 0306) is being decreased from 30% to 10%

3/ BCD on frozen krill, mussels and squids is being decreased from 30% to 15%.

*Comment:* There is very little import of live shrimps in India. No impact of all these changes on the business of any shrimp feed manufacturer or processed shrimp exporter.

*Cocoa Beans*

4/ BCD on Cocoa beans, whole or broken, raw or roasted is being decreased from 30% to 15%. This will help reduce prices of chocolates. *Positive for the likes of Nestle and Britannia.*

*Coal/Peat Lignite*

5/ BCD on coal, peat and lignite has been increased from 2.5% to 5% while imports from Indonesia remains at 1%,. *Negative for all users of the imported fuel from Australia, South Africa etc.* given the already high prices.

*Chemicals*

6/ BCD on sodium cyanide increased from 7.5% to 10%. *Positive for the two manufacturers in India i.e. *Gujarat Alkalies and Chemfab Alkalies*.

7/ BCD on import of *methanol and acetic acid reduced from 5% to 2.5% and 7.5% to 5%* respectively. *Marginal negative for GNFC, GSFC and Deepak Fertilizers.* *Positive for Laxmi Organics and Jubilant Ingrevia*

*Paper Industry*

8/ BCD rate of 5% is prescribed on wood in chips or particles, used in manufacture of paper, paperboard and newsprint effective 1st April 2023. *Some impact on importers of softwood for making certain grades of paper although most paper makers who import bring in paper pulp.*

9/ BCD on recovered (waste and scrap) paper or paperboard imported for manufacture of paper, paperboard or newsprint is being increased from Nil to 2.5%. *Will add to the costs of waste based paper manufacturers like ITC, Andhra Paper and NR Agarwal.* However, if demand remains firm this can be passed on. It is positive for others who will benefit from the increase in product prices. 

*Metals*

10/ Custom duty on steel scrap including stainless steel scrap will remain zero for another year (FY23). *Positive for EAF electrode consumption (Graphite India and HEG)*.

11/ Anti-dumping duty on bars and rods of alloy steel, high speed steel, Al or zinc coated flat rolled steel products and hot rolled or cold rolled stainless steel flat products will be permanently revoked effective today. Most of the ADD was on imports from China. *It will be negative for certain sections of the steel industry especially stainless steel manufacturers.*

*Cement*

12/ Import duty on cement reduced from 10% to zero. Will be *negative for producers in states like Punjab and Tamil Nadu which can attract imports from Pakistan and Sri Lanka.*

*Capital Goods*

13/ BCD of 2.5% to 7.5% is being imposed on a whole range of capital goods included in Chapter 84. These include marine sea water pumps, sports machinery, automatic fish/prawn feeders, effluent treatment plants for leather industry, high voltage power transmission projects, certain goods used in textile industry like shuttle less looms, knitting and weaving machines etc., goods used in offshore oil exploration, parts of wind operated electricity generators including magnets, parts used in maintenance of fertilizer plants and construction of oil refineries and power generation plants, agricultural implements, machinery used by the leather and footwear industry, compressor blocks and crankshafts used in refrigerators, kits for conversion of petrol/diesel to CNG vehicles, etc.

*Comment:* While this has been done to promote domestic manufacturing, it will increase capex costs for those who have already placed orders and do not have a choice of substituting imports with domestic manufacturers. *Positive for someone like Lakshmi Machine Works and Negative for Voltas, Samsung, Whirlpool etc.* 

*Electronics*

14/ Various parts used in making smart wrist watches like PCBs, charging cable, display assembly, vibrator motor, batteries etc. will attract a rising duty rate from 5% to 15% from FY24 onwards. Currently it is zero. *Positive for the electronic manufacturing* in India.

15/ On the other hand, BCD on camera lens and parts of transformers used in chargers of mobile phones to be reduced from 10/15% to 2.5%/5%. *The decision to reduce in the case of transformer parts is surprising as there is a PLI scheme which has attracted investments in making ferrite cores for transformers which can be used in mobile phones*.