Budget 2019: Duty exemption to improve cash flow of forces

NEW DELHI: The withdrawal of customs duty on imported defence items that are not manufactured in India is likely to improve cash flow for the armed forces but a lack of additional funds is expected to hit defence modernisation.

Finance minister Nirmala Sitharaman reversed the customs duty on defence items that was imposed in 2016, a move that will reduce paperwork for the forces. Prior to this, customs duty paid for such items was loaded onto the purchase price by foreign vendors, creating an unnecessary bureaucratic chain. Interests of Indian manufacturers will be protected as the exemption has been given to only those items that are not made in India. Defence minister Rajnath Singh said that the move will augment the defence budget by Rs 25,000 crore on account of savings in expenditure on customs duty over the next five years.