The government on Tuesday proposed to increase the basic customs duty (BCD) on import of commonly used items, including headphones and earphones, loudspeakers, smart meters, imitation jewellery, solar cells, solar modules to promote domestic manufacturing in the in the Union Budget for 2022-23.

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However, imported cut and polished diamonds, frozen mussels, frozen squids, asafoetida, cocoa beans, methyl alcohol and acetic acid will become cheaper as a result of rationalisation in customs duties.

The government has decided to calibrate BCD to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.

It has been proposed to reduce BCD on camera lens for use in manufacture of camera module for cellular mobile phone to 2.5 per cent from 15 per cent.

To help the MSME sector, the government has proposed to raise BCD on import of umbrella to 20 per cent from existing 10 per cent and also withdrew exemption to parts of umbrellas.

"Exemption is also being rationalised on implements and tools for agri-sector which are manufactured in India," said Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2022-23.

Customs duty exemption given to steel scrap last year is being extended for another year to provide relief to MSME secondary steel producers.

While duty on products such as methyl alcohol (methanol) and acetic acid has been brought down to 2.5 per cent and 5 per cent, respectively from the existing 10 per cent.

"Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining are being reduced, while duty is being raised on sodium cyanide for which adequate domestic capacity exists. These changes will help in enhancing domestic value addition," she added.

Custom duty on cocoa beans has also been reduced to 15 per cent from 30 per cent.

Similarly, customs duty on cut and polished diamonds and gemstones is being reduced to 5 per cent from 7.5 per cent and nil on simply sawn diamond, to give a boost to the gems and jewellery sector.

Moreover, to disincentivise import of undervalued imitation jewellery, the government has fixed it at 20 per cent or Rs 400/kg, whichever is higher.

The government has also proposed to bring import of recovered (waste and scrap) paper for manufacturing paper, paperboard or newsprint under BCD. It will now attract to 2.5 per cent duty.

"Customs' reforms have played a very vital role in domestic capacity creation, providing level-playing field to our MSMEs, easing the raw material supply side constraints, enhancing ease of doing business and being an enabler to other policy initiatives such as PLIs and Phased Manufacturing Plans,"  said the finance minister.