The Union Budget 2024-25 has promised significant changes across various sectors, with key announcements including substantial reduction in custom duties on cancer medicines, mobile phones, silver, gold, leather goods and seafood.
“The government will exempt three more cancer treatment drugs from customs duties. We are also reducing the basic customs duty on mobile phones, chargers, and other mobile components,” Sitharaman stated during her Budget 2024 presentation in Parliament on Tuesday.
The reduction in customs duties on gold and silver to 6% is expected to boost retail demand and help mitigate smuggling issues in the world’s second-largest bullion consumer. However, increased gold demand could impact India’s trade deficit and place additional pressure on the rupee.
Let’s look at what will become cheaper
Mobile Phones: The FM has announced reduction in the basic customs duty on mobile phones and chargers to 15%. “With a three-fold increase in domestic production and almost a 100-fold jump in the export of mobile phones in the last six years, the Indian mobile industry has matured. In the interest of consumers, I now propose to reduce the basic customs duty (BCD) on mobile phones, mobile PCBA, and mobile chargers to 15%,” she said in her speech.
Gold, Silver and Platinum: The budget proposes to cut customs duty to 6% on gold and silver. It also promises to cut customs duty on platinum to 6.4%. “To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6 per cent and that on platinum to 6.4%,” said the finance minister in the Budget 2024 speech.
Cancer Drugs: Three cancer drugs — Trastuzumab Deruxtecan, Osimertinib, and Durvalumab — will be exempt from customs duties to provide relief to patients. Trastuzumab Deruxtecan is used for certain types of breast cancer and works by delivering chemotherapy directly to cancer cells. Osimertinib is used for a type of lung cancer with specific gene mutations and helps stop the growth of cancer cells. Durvalumab is an immunotherapy drug used for lung and bladder cancers, helping the immune system attack cancer cells. The National Cancer Registry Programme (NCRP) highlights the overall cancer burden in India, indicating that approximately 1 in 9 people will develop cancer in their lifetime. Health experts have said that the move is expected to make the drugs more affordable for cancer patients.
Seafood: Finance Minister Nirmala Sitharaman said the government will provide finance for shrimp farming and marketing while presenting the Union Budget 2024-25. She said the government has reduced the basic customs duty on shrimp to 5%.
Solar Energy Parts: The government has proposed expanding the list of exempted capital goods for manufacturing solar cells and panels, boosting the renewable energy sector.
Critical Minerals: The finance minister announced a full exemption of customs duties on 25 critical minerals, including lithium, copper, cobalt, and rare earth elements, crucial for sectors like renewable energy and high-tech electronics. Basic customs duty on two of these minerals will also be reduced. Basic customs duties on these materials will be removed, aiding the manufacturing sector.
Footwear: Customs duties on leather and footwear manufacturing will be reduced.
Why Customs Duty Has Been Reduced
Customs duty on gold and silver has been reduced to 6% which may lead to a decline in domestic prices and perhaps lift demand. The existing duty on gold and silver is 15% which comprises 10% of basic customs duty and 5% as Agricultural Infrastructure Development cess. Gold prices on the MCX hovered at Rs 72,838 per 10 grams on Tuesday, hitting an intraday low of Rs 68,500.
The exemption of custom duty on cancer drugs has been done to bring down the cost of cancer treatment in India. The Union minister also brought down the customs duty on X-ray tubes used in medical X-ray machines. The current duty of 15% will be reduced to 5% until March 31, 2025. Thereafter, the duty will increase to 7.5% from April 1, 2025, to March 31, 2026, and then revert to 10% from April 1, 2026.
The decrease in basic customs duty on mobile phones would give a boost to the domestic production. Smartphone manufacturing is a key plank of Prime Minister Narendra Modi’s ambitions to boost the Indian economy and create jobs by attracting companies such as Apple, Foxconn and Samsung to India, the world’s second-largest mobile market where production grew 16% year-on-year to $44 billion last year.
In the beginning of her budget speech, the finance minister said the people of country have reposed their faith in the Modi government and re-elected it for a historic third term under the leadership of Prime Minister Narendra Modi.
“We are grateful for their support, faith and trust in our policies. We are determined to ensure that all Indians, regardless of religion, caste, gender and age, make substantial progress in realising their life goals and aspirations,” she said.
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