Budget 2021: Importation of agricultural commodities limited

The Budget for the year 2021 has a number of proposals regarding foreign trade and the national economy.

Prime Minister Mahinda Rajapaksa, acting as the Finance Minister, delivered the 2021 Budget Speech at the Parliament today (November 17).

He stated that the following proposals will be implemented with regard to foreign policy and the Sri Lankan economy:

- To limit the importation of agricultural commodities except for the items that cannot be produced domestically (negative List).

- To impose the Special commodity levy to balance the supply and demand for domestic production for selected agricultural products

- To impose CESS to provide the required protection on the imports and exports of domestic production

- To remove import taxes on the raw materials not available in the country, machinery, and equipment with modern technology, to boost exports, and also to encourage domestic industries to produce value-added goods

- To classify all imports other than the above, under three categories of  0, 10, and 15 percent.

- If any commodity has been exempted from VAT at its importation point, I propose to exempt from VAT, the domestic production of that particular commodity as well.

- In order to make import and export procedures more efficient the officials of required regulatory bodies, will be assigned to the Department of Import and Exports to provide the required services.

- To ban the importation of batik products under national subheadings in order to develop batik and related fashions as a national industry.

- In order to develop the local garment industry as a local and international garment manufacturing hub with high-quality garment and leather products demanded by foreigners and tourists, relax the import and to implement the new tariff system.

- To develop the Rathnapura International Gem Industry City and enhance the gem and jewelry industry.

- In order to encourage the exports of multinational companies which are import-based for requirements of the domestic market, it is proposed to reduce the tax imposed on their dividends by 25 percent in 2021 and 50 percent in 2023 under the condition that they increase their exports by 30 percent and 50 percent in the respective years.
 
- In order to maintain a similar amount as the import expenditure in foreign exchange in domestic banks, the interest income of such deposits will be exempted from taxes.

- Development of untapped industries such as mineral sand, phosphate, fertilizer, and graphite as export industries with high value. To develop the latent industries such as mineral sand, phosphate, fertilizer, and graphite as high-value export industries, I propose to reduce the expenditure on research and development expenses of local entrepreneurs involved with the Institute of Nanotechnology from taxes. I propose to allocate Rs. 2,000 million to initiate the registration of the Sri Lanka identity of these products.

- Provide investment incentives for rubber and coconut related industries, building materials, and office equipment and furniture as major industries. I also propose to provide incentives for investments on household needs as well as coconut related industries including brooms, ekel brooms, rugs, and rubber related products including agricultural and consumer needs, building materials, office furniture, to support them as main industries.

- To provide separate docks, dockyard access facilities, and long-term credit facilities to promote boat and shipbuilding activities which have high development prospects due to the rising demand in the fisheries, tourism, and shipping sectors and the high production potential of local manufacturers. It is also proposed to grant a tax break of 7 years for local boat and shipbuilding.