Inverted duty structure impacts the domestic industry adversely as manufacturers have to pay a higher price for raw material in terms of duty, while the finished product lands at lower duty and cost.
It said that in recent times, India's tariff regime has come under pressure from trade partners who seek a cut in the country's basic customs duties.
India has defended its tariff regime stating that it is necessary for protecting the vulnerable businesses in India.
However, it said independent of trade partners, the government is aware that some reduction in tariff rates may have to be done in respect of intermediate inputs and raw material to correct the presently inverted duty structure.
"A corrected duty structure will reduce the cost of intermediate inputs imported for manufacturing of exports thereby making the country's exports more competitive," the Survey said.
It will be a right incentive for boosting manufacturing and also increase the growth of exports, it added. RR CS HRS