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Reforms in GST, Custom Duty, MSMEs to Push India’s Growth: GTRI

Updated: Jun 13, 2024 05:13:20pm

Reforms in GST, Custom Duty, MSMEs to Push India’s Growth: GTRI

New Delhi, Jun 13 (KNN) The Global Trade Research Initiative (GTRI), a prominent economic think tank, released a comprehensive policy agenda on Thursday, urging the implementation of strategic reforms across various sectors.

According to the GTRI, India stands at the cusp of a transformative era, necessitating comprehensive economic reforms.

The proposed agenda addresses a wide range of issues, from simplifying the customs duty structure and pioneering regulatory frameworks for emerging sectors like cryptocurrencies, to boosting the MSME (Micro, Small, and Medium Enterprises) sector through GST (Goods and Services Tax) reforms and fortifying the nation's energy security.

One of the key recommendations is the simplification of the convoluted customs duty structure, which currently affects imports worth USD 680 billion.

The current structure, which has not been reviewed in 20 years, features over 27 different duty rates and over 100 specific or mixed duty slabs.

Notably, 85 percent of customs duty revenue comes from less than 10 percent of tariff lines, while 60 percent of tariff lines contribute less than 3 percent of revenue.

The GTRI suggests that with some adjustments, the average import tariff could be reduced from 18.1 percent to below 10 percent without impacting essential products.

This simplification would not only address global criticism, such as former US President Donald Trump's portrayal of India as the "tariff king," but also contribute to the nation's broader economic objectives.

Furthermore, the think tank proposes increasing the GST exemption limit for a firm's annual turnover from Rs 40 lakh to Rs 1.5 crore.

This move is anticipated to be transformative for India's MSME sector, promoting job creation and growth. Firms with less than Rs 1.5 crore turnover account for over 80 percent of GST registrations but contribute less than 7 percent of the tax collected.

Addressing concerns over India's growing reliance on Chinese imports, particularly in sectors like electric vehicles (EVs) and active pharmaceutical ingredients (APIs), the GTRI recommends avoiding incentives for low value-added EVs and instead focusing on developing domestic capacity for API production.

Finally, the agenda highlights the need to simplify e-commerce export rules, which could enable more than 20 lakh Indian firms to explore export opportunities, thereby boosting the nation's exports across various sectors, including handicrafts, jewelry, ethnic wear, decorative paintings, and Ayurvedic products.

(KNN Bureau)


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