Customs duty cuts across sectors: Experts predict rise in consumer confidence and spending
Tirupati: Finance minister Nirmala Sitharaman's Union Budget 2024-25 on Tuesday has set the stage for significant shifts in consumer spending patterns and market dynamics.
The budget, lauded for its consumer-centric approach, introduces sweeping cuts in customs duties across various sectors, notably electronics and precious metals.
Sitharaman highlighted the maturing of the nations mobile phone industry and stated, "Domestic production has increased threefold and exports of mobile phones have increased 100-fold in the last 6 years."
She announced a reduction in basic customs duty (BCD) on mobile phones, mobile printed circuit board assembly and mobile chargers from 20 per cent to 15 per cent. This would make smart phones more accessible while bolstering the 'Made In India' initiative.
"Reducing customs duties on consumer electronics like mobile phones is a strategic move by the Centre that could have far-reaching implications. This would boost domestic manufacturing, reduce import dependence and increase value addition not just in the smart phone sector, but across related industries as well,” noted Ravi Kumar, a retired economics professor.
“This would spur consumer spending across industries, potentially raising GDP growth by 0.5 to 0.7 percentage points in the next fiscal year,” he said.
The jewellery sector also received a boost with customs duty cuts on gold and silver to 6 per cent and on platinum to 6.4 per cent. Following this announcement, gold prices in Andhra Pradesh fell by `2,200 per sovereign (`275 per gram) on Tuesday.
The price of one gram of 22K gold in the state now stood at `6,495, while one sovereign cost `51,960.
"The reduction in import duties on precious metals is a game-changer. We project a potential 3-5 per cent decrease in domestic gold and silver prices in the short term. This could stimulate a 15-20 per cent surge in demand, particularly in the upcoming wedding season. However, it's crucial to note that the global market trends and currency value fluctuations will also impact the prices," explained Priyaka Jain, a gold market analyst.
A Hemalatha, a 52-year-old housewife from Chittoor, said, "I've been saving for my daughter's wedding. With the gold price coming down a bit, I might increase my purchase by 15-20 grams."
V. Yamini Reddy, a jewellery enthusiast from Tirupati said, "While any decrease in gold price is welcome, I'm not sure how much of an impact this 6 per cent duty cut will actually have on retail prices. Gold has always been an important investment for Indian families, so even a small reduction could make a difference."
