Resumption of Wheat Imports
Context:
India will begin wheat imports after a six-year hiatus to replenish depleted reserves and control rising prices caused by three years of poor harvests.
Relevance:
GS-03 (Economy)
Key highlights:
- Removal of Import Tax: New Delhi is expected to lift the 40% tax on wheat imports this year, enabling private traders and flour millers to purchase wheat from producers like Russia.
- Timing of Import Duty Removal: The government is likely to wait until after June to remove the import duty, coinciding with Russia’s wheat harvest season.
- Industry Support: Pramod Kumar, president of the Roller Flour Millers’ Federation of India, supports the removal of the wheat import duty to ensure sufficient supplies in the open market.
- Government Strategy: The government plans to remove the import duty after June and reinstate it before wheat planting starts in October to protect farmers’ interests.
- Context of Decision: The decision to scrap the import tax is expected to be made after the conclusion of general elections, which has been a key hurdle in addressing the wheat supply issue.
Customs Duty in India
- Customs duty is an indirect tax imposed on goods that are imported into a country and, in certain cases, on specific exported commodities.
- When goods are exported, the duty imposed is called export duty, while for imported goods, it is known as import duty.
- This taxation serves dual purposes: generating revenue for the government and protecting domestic industries from international competition.
Framework of Customs Duty in India
- The Customs Act of 1962 governs the imposition of customs duty in India.
- This act empowers the government to levy duties on imports and exports, regulate the movement of goods across borders, prescribe procedures for customs processes, and enforce penalties for violations.
- The Central Board of Excise and Customs (CBEC), a part of the Department of Revenue under the Ministry of Finance, administers customs duties. The CBEC formulates policies related to the collection of customs duties, curbing evasion, preventing smuggling, and managing administrative decisions pertaining to customs matters.
Calculation of Customs Duty
- Customs duty is determined based on several factors, including the value, size, and weight of the goods.
- Ad valorem duties are calculated based on the value of the goods, while specific duties are based on quantity or weight.
Types of Customs Duties
Customs duties are broadly categorized based on the type of goods and their purpose. The key types are:
- Basic Customs Duty (BCD): This is imposed on imported goods as per Section 12 of the Customs Act, 1962, and is outlined in the First Schedule of the Customs Tariff Act, 1975.
- Countervailing Duty (CVD): Levied under Section 3 of the Customs Tariff Act, 1975, this duty is equivalent to the central excise duty imposed on similar goods produced within India.
- Protective Duty: Recommended by the Tariff Commission and levied under Section 6 of the Customs Tariff Act, protective duties shield domestic industries from foreign competition.
- Education Cess: An additional charge on customs duties, comprising a 2% education cess and a 1% higher education cess, implemented since July 9, 2004.
- Anti-dumping Duty: This duty is imposed when goods are imported at a price below their normal value, aiming to bridge the gap between the export price and the fair market value (dumping margin).
- Safeguard Duty: Applied when a sudden increase in imports is found to harm the domestic industry, as a protective measure.
Exemptions and Special Cases
- Certain goods are exempt from customs duties to promote public welfare and development. These include life-saving drugs and equipment, fertilizers, and food grains.
Online Customs Duty Services
- The Indian Customs Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway, known as ICEGATE, facilitates online customs duty processes.
- It offers e-filing services for various customs-related documents such as Bills of Entry and Shipping Bills. ICEGATE supports trade and freight carriers, referred to as Trading Partners, through various electronic means including email, FTP, and web uploads.
