Industry body Confederation of Indian Industry (CII) has suggested that the government should review the exemption of import duty granted to defence forces and the Ministry of Defence for direct import of defence equipment. In its Pre-Budget Memorandum, industry body CII has said that the reintroduction of the exemption on custom duty on defence systems in the last Budget, which allows the Ministry of Defence or the defence forces to import the defence systems without bearing the customs duty, affects the domestic manufacturers.
Finance Minister Nirmala Sitharaman will present the Union Budget for financial year 2020-21 on February 1. Defence equipment manufacturers will monitor any announcements on the customs duty rules concerning the industry.
"By introducing exemption, it has not only made Indian Industry uncompetitive but also put them into further disadvantage position as the proposed exemption is applicable only for direct Imports by ministry of defence or defence forces," the industry body said in its Pre-Budget Memorandum.
"The said notification not only encourages direct Imports but also discourages indigenization of defence manufacturing as Indian defence industry will not be able to compete with foreign defence supplier due to lack of level playing field," CII said.
"By re-introducing this custom duty exemption, is not only a regressive step but it is dent to India's vision for Make-in-India and self-reliance on defence capability. If government fails to take immediate corrective action, it will have far reaching negative impact on Indian defence industry which in turn will have negative impact on employment and overall economic growth of the country," the industry body added
CII has suggested that the duty exemption should be extended to the domestic defence industry on import of raw material, components or parts required for manufacturing defence systems, in line with the erstwhile custom duty exemption to narrow down the impact of level-playing field.