The Ministry of Heavy Industries has told the Parliamentary Standing Committee on Industry that it favours an increase in customs duty on capital goods.

In its response to the panel’s recommendation, the Ministry said that the prevailing rate of 7.5 per cent is much lower than the WTO bound rate of customs duty for capital goods, which varies between 25 and 40 per cent.

The Parliamentary Committee had recommended in an earlier report that it favoured non-tariff trade barriers and effective implementation of the schemes for modernisation of the capital goods sector to strengthen the domestic industry.

“In order to protect the domestic capital goods industry, the Department of Industries (in the Commerce Ministry) would like to recommend the higher rate of customs duty of 15 per cent which is still much lower than the WTO bound rates,” the Ministry said and added that the issue will be taken up with the Commerce Ministry.

The Ministry’s reply is added in an Action Taken Report adopted by the panel, headed by K.C. Tyagi, Janata Dal (United) Member of Parliament, in its meeting here on Thursday. The report will be tabled in Parliament during the Winter Session, scheduled to begin in the first week of December.

On the concerns of the Indian industry regarding import of second hand machinery, the Ministry said discussions with the Ministries of Textiles and Road, Transport and Highways are on and a decision will be taken shortly.

On free trade agreements, the Ministry said it supported the industry against inclusion of machinery for reducing the import duty further under various FTAs at various inter-ministerial meetings.

It has asked the Government to keep it posted on the progress made in the discussions among various ministries on following the WTO norms and restrictions on second hand import.

The committees on Commerce and Agriculture had also urged the Centre to provide protection for Indian industry and farmers while negotiating free trade agreements.

Ahead of the WTO ministerial conference scheduled for next week, there is political pressure on the Centre to reject the “Peace Clause” offered by the developed countries.