Government to Resolve Inverted Duty Structure to Boost Domestic Manufacturing

FDT Bureau

Reports suggest that the government is likely to take action to address the issue of the inverted duty structure for several products, including paper, furniture, washing machines, solar glass and air purifiers, with the aim of promoting domestic manufacturing. Here is a detailed report on FURNITURE DESIGN AND TECHNOLOGY (FDT).

An inverted duty structure occurs when the tax rates on inputs are higher than those on finished products, leading to an accumulation of credits and increased costs. This situation can disadvantage domestic manufacturers by making it more expensive to produce goods locally compared to importing finished products. To tackle this issue, the Commerce and Industry Ministry has reportedly conducted extensive consultations with industry associations and export promotion councils to identify products affected by the inverted duty structure. Following these consultations, the ministry has compiled and submitted a detailed list of such products to the Finance Ministry for consideration.

The official emphasized that the list includes a range of products, such as paper, furniture, washing machines, solar glass and air purifiers. By addressing the inverted duty structure for these items, the government aims to reduce the financial burden on domestic manufacturers and enhance the competitiveness of Indian-made products. This move is expected to support the government’s broader objective of boosting domestic manufacturing and encouraging local production. By correcting the duty imbalances, the government seeks to create a more favorable environment for manufacturers, which could lead to increased investment, job creation, and economic growth.

Furthermore, resolving the inverted duty structure is seen as a crucial step in aligning the tax framework with the goals of the Make in India initiative, which aims to transform India into a global manufacturing hub. The initiative focuses on fostering innovation, enhancing skill development, and building best-in-class manufacturing infrastructure.

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