The Union Budget 2023-24 is expected to initiate fresh measures to boost the local supply chain network as India has aggressively set out to position itself as a global manufacturing and export hub.

Sources said that the government is looking into issues of raw material imports and removing the inverted duty structure for critical inputs to boost manufacturing in India, it is also looking at incentivising production of these items to be able to build a solid value chain.

The issue of raw material duties has been a thorny issue for many years.

“With many companies now looking to shift their manufacturing facilities to India, there is a need to work on all anomalies to ensure a smooth environment for companies. But it is also important to start building the value chain to reduce dependence on imports of such crucial material. It is somewhat challenging but policymakers are working on it,” a person familiar with the development told India Narrative.

The Budget could spell out measures to address this issue.

Inverted duty structure refers to higher taxes for inputs or raw materials compared to built-in products or finished products. Manufacturers in the country have been complaining of the inverted duty structure, which has increased overall costs.

India’s imports from China have surged in 2022.

According to latest data, bilateral trade between India and China touched a record $135.98 billion in 2022, an increase of more than 20 per cent compared to the previous year.

India has maintained that its bilateral relations with Beijing will not impact the economic dealings.

However, the Swadeshi Jagran Manch, affiliated to the Rashtriya Swayamsevak Sangh has highlighted that raising tariffs for raw materials is the need of the hour to protect Indian manufacturers.

“We have insisted upon raising tariffs of raw materials and resume production of these at idle factories. Take the example of viscose (a raw material used for clothing materials). We are importing viscose from China but we need to start producing this in the country. There are factories which produced this material, we need to resume production and make India totally ‘Aatmanirbhar’,” SJM co-convener Ashwani Mahajan said.

Mahajan added that a faulty narrative has been built, emphasising reduction in tariffs.

An analyst said that a well balanced approach is needed.

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