The Confederation of Indian Industry (CII) has highlighted several points that India’s $854-billion retail trade could benefit from its pre-budget memorandum for 2021-22.
The recommendations of the industry body put forth, ahead of the Union budget for FY22, include reducing customs duty on the import of furniture, overhauling local testing facilities of imported items such as toys, and enabling a pan-India return of goods in stores.
Earlier this year, the Union government had moved to hike customs duty on imported furniture from the existing 20% to 25% to safeguard the interests of India’s micro, small and medium enterprises. The announcement was made a part of the Union Budget 2020-21.
CII’s set of recommendations said higher taxes are detrimental for most retailers as it prevents them from keeping costs low for end-consumers. “Recently we have seen that customs duty on furniture products and raw material to manufacture furniture products has been increased substantially. This has resulted in disturbance in the furniture industry. This further has resulted in inflation for the final customers," CII said.
Tariff increases result in higher prices for imports, but also reduce incentives for keeping the cost of production down. This puts a brake on making products affordable to customers, the industry body said.
CII has sought a reduction in customs duty for furniture products and raw material used to manufacture furniture and asked the government to avoid frequent changes to the rates.
This will go a long way in making India competitive to do business and make products affordable to the consumer, it said.