Wednesday, December 31, 2008

YEAR END REVIEW OF DEPARTMENT OF COMMERCE

INDIA’S EXPORTS INCREASE FROM $ 63.8 BILLION IN 2003-04 TO $ 119.3 BILLION IN 2008-09 (APR-NOV) – SEZs GENERATE EMPLOYMENT

YEAR END REVIEW OF DEPARTMENT OF COMMERCE

India’s merchandise exports increased from US $ 63.8 billion in 2003-04 to US $ 162.9 billion in 2007-08 recording average annual growth rate of 26.4% during the last four years. Steps taken by the Government to arrest deceleration of export -- (1) Excise duty reduced across the board by 4% for all products except petroleum products and those products where current rate was less than 4%; (2) Interest subvention of 2% has been provided till 31.3.2009, to the following labour intensive sectors for exports: Textiles (including Handlooms), Handicrafts, Leather, Gems & Jewellery, Marine Products and SMEs; (3) Additional funds of Rs.350 crore provided for export incentive Schemes; (4) All items of handicrafts included in Vishesh Krishi and Gram Udyog Yojana; (5) Back-up guarantee to ECGC for up to Rs.350 crore; (6) Rs1,100 crore provided to ensure full refund of claims of CST/Terminal Excise duty/ Duty drawback on deemed exports; (7) Additional funds of Rs.1400 crore provided for textile sector to clear the backlog claims of TUF; (8) Export duty on iron ore fines eliminated, and for lumps, reduced to 5%; (9) Import duty on naphtha for power sector eliminated; (10) Some pending issues relating to Service Tax refund on exports – resolved.

Special Economic Zones

SEZs have created employment for large number of unemployed rural youth. Even in the services sector, 12.5 million sq meters space is expected in the IT/ITES SEZs which as per the NASSCOM standards translates into 12.5 lakh jobs. It is, therefore, expected that establishment of SEZs would lead to fast growth of labour intensive manufacturing and services in the country. The total investment in the SEZs, as on 30th September 2008, were Rs.93507.23 crore and the total employment generated so far to 3,62,650 persons.

Out of the 531 formal approvals given till date, 174 approvals are for sector specific and multi product SEZs for manufacture of Textiles & Apparels, Leather Footwear, Automobile components, Engineering etc. which would involve labour intensive manufacturing. Exports from SEZs during the year 2007-08 was to the tune of Rs.66,638 crore with a growth of 92% over 2006-07 (overall growth of exports of 381% over past four years (2003-04). The export projection for 2008-09 is Rs.1, 25,950 crore.

Gems & Jewellery

During the year 2007-08, exports in gems & Jewellery sector were worth US $ 19,657.36 million dollars and registered growth of 23.13% as compared to the year 2006-07. During the period April-July of the current fiscal exports worth US $ 6296.14 million were effected as against US $ 6141.92 million during the corresponding period previous year.

Marine Products

Marine Products Export Development Authority had initiated following measures to sustain the export of marine products during the current year: 1. Launched a comprehensive programme to tap deep sea resources of Tuna and finalised an action plan for development of tuna fishery in the Andamans. 2. Increased thrust on diversification of culture practices and launched a new scheme for providing financial assistance for value addition. 3. Introduced for the first time in the world Organic fresh water shrimp in the international market. 4. Promoted ornamental fish breeding for export. 5. Took steps to set up six more screening laboratories in Andhra Pradesh to improve the quality of shrimp exported. 6. Undertook R&D activities for new aquaculture technologies / innovative methods for increasing the production of fin/shell fish varieties. 7. Taken steps to introduce a brand promotion scheme to promote the image of Indian Seafoods at abroad.

Anti-dumping Investigations during 2008

During the year 2008, the Directorate General of Anti Dumping has so far initiated 18 fresh anti-dumping investigations (till 8.12.2008). The products involved are Cable Ties, All Fully Drawn or Fully Oriented Yarn/Spin Draw Yarn/Flat Yarn of Polyester, Plain Medium Density Fibre Board, Power Steering Gear System, Thyionyl Chloride, Plastic Processing Machinery, Cathode ray Television Picture Tube – III, Nylon Tyre Cord Fabrics, Flax Fabrics, Ceramic tiles, Tyres Curing Presses, Radial Tyres, Pencillin – G, Phosphoric Acid, Diethyl Thio Phosphoryl Chloride, Cold Rolled Products of Stainless Steel, Hot Rolled Steel Products and Axle Beam and Steering Knuckles. The countries involved in these investigations are China PR, Thailand, Vietnam, Malaysia, New Zealand, Sri Lanka, European Union, Indonesia, Belarus, Hong Kong, Korea RP, Japan, South Africa, Taiwan, USA, Iran, Kazakhstan, Saudi Arabia, Russia, Romania, Turkey and Ukraine.

Performance of Plantation Sector

COFFEE – The Government of India has approved the Development Support Scheme for coffee sector with a total financial outlay of Rs.310 crore during the month of March 2008. An area of 47776 hectares has been brought under plantation from January to November 2008. A new scheme on Export Promotion of Coffee and the scheme on Support for Coffee Processing have been approved by the Government of India with a total financial outlay of Rs.45 crore on April 10, 2008. The total export for the period from January to November 2008 was 2,08,023 tonnes earning a foreign exchange of Rs.2,271.81 crore against 2,04,538 tonnes earning a foreign exchange of Rs.1,773.50 crore during the same period last year.

RUBBER – India is the fourth largest producer of rubber with a share of 8.3% in the world production. The rubber sector accounts for 93% of the production and 89% of the area with an average holding size of 0.5 hectare. Natural rubber export and import is expected to reach 72,000 tonnes and 80,000 tonnes respectively in 2008. The Rubber Training Centre received ISO: 2000 certificate in June 2008.

SPICES – Indian spices industry recorded an export of 4,44,250 tonnes worth over US $ 1 billion during the year 2007- 2008. It marked a quantum leap of 19 per cent in volume and 24 per cent in rupee value. Mumbai is the major hub for export of spices and has alone accounted for 39% in volume of the total spice exports during the last financial year.

TOBACCO – India earned a foreign exchange of Rs.2,022.78 crore and Rs.10,271.55 crore as excise revenue in the year 2007- 2008. The exports of tobacco and tobacco products during 2007- 2008 were valued at Rs.2022.78 crore. During April-October 2008, exports of tobacco and tobacco products were valued at Rs.1952.43 crore. During April-October 2008, unmanufactured tobacco exports were valued at Rs.1623.10 crore and exports of tobacco products were valued at Rs.329.33 crore. Going by the current trend exports of tobacco and tobacco products are expected to cross US $ 600 million during 2008- 2009.

Prospects of the Doha Round

India continues to believe in strengthening the multilateral trade rules of the WTO. The full liberalisation through the WTO secures the economic and commercial gains necessary in the goods and services sectors and modes of supply of interest to developing countries. India has reiterated the need for a serious discussion on the expectations of WTO Members regarding other issues. The developing countries want to have progress in some of these issues such as the TRIPS-CBD issue. The WTO Ministers will raise issues that they consider important and it would therefore be prudent to prepare for this so that the discussions in the Ministerial Conference can be held in a constructive environment and lead us to a successful conclusion.
Further, progress needs to be made in other areas of negotiations as well, that are of great interest to the developing countries. Our focus is on the bankable commitments from our major trading partners in areas where we have relative strengths and which would provide certainty and value to trade in Services. India has made it known that without bankable commitments from the major developed countries in Services, it may be difficult for India to agree to the modalities on Agriculture and NAMA. India needs to have clear information on the important elements which are required for completion of Services’ negotiations too.

India has been engaging constructively and actively with other fellow Member countries of the WTO towards this end. For India, it is important that the Doha Round negotiations are brought to a successful conclusion. Such a conclusion can only be possible if we are faithful to the mandate and the outcome reflects a clear balance between market opening and the development needs of the majority of the membership. India is ready to show the necessary flexibility to achieve such an outcome but the onus for movement lies largely with the developed countries.

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Monday, December 8, 2008

Rs 2,000-cr boost fails to cheer exporters

NEW DELHI: The government on Sunday announced a booster package of Rs 2,000 crore for exporters faced with falling orders from Western markets
and a severe credit shortage.

The incentives, part of the overall demand stimulus package announced by Planning Commission deputy chairman Montek Singh Ahluwalia, include interest rate subvention for labour-intensive sectors, additional allocation for export incentive schemes, government back-up guarantee for exports, additional funds for full refund of terminal excise duty and CST, export duty and refund of service tax on foreign agent commissions of up to 10% of value of exports.

The government has also decided to eliminate export duty on iron ore fines and reduce export duty on lumps to 5%.

While exporters are disappointed that the package is focusing on just a handful of sectors, the government has said more steps could be taken that would benefit exporters from other sectors as the committee of secretaries will keep meeting to assess the situation. “We will consider extending interest subvention to sectors beyond the ones announced today (Sunday). The committee of secretaries, which will now be headed by the Cabinet secretary, will continue to meet to assess the situation on a regular basis,” commerce secretary GK Pillai told the reporter.

But exporters feel steps need to be taken urgently. “The recession is even deeper than one thought and recovery is likely to take longer. The government should supplement the endeavour of RBI expeditiously and announce interest subvention scheme for exports along with other additional measures immediately,” said Fieo president Ganesh Kumar Gupta.

Delhi Exporters Association (DEA) president SP Agarwal pointed out that over 10,000 units had closed down and there was urgent need for more action. “We do not want incentives in a piece-meal basis. We expect a sound package from the government which should include income tax exemption for exporters,” Mr Agarwal said.

According to the package announced on Sunday, pre- and post-shipment export credit for five labour-intensive sectors, including textiles (which incorporates handlooms, carpets and handicrafts), leather, gems & jewellery, marine products and the small and medium enterprise (SME) will be given an interest subvention (or discount) of 2% up to March 31 2009 subject to minimum rate of interest of 7% per year.

“This would cost the exchequer about Rs 400 crore,” Mr Pillai said.

An additional allocation for export incentive schemes of Rs 350 crore has been made which will be distributed to schemes like the Vishesh Krishi and Gram Udyog Yojana and the Market Development Assistance. The handicrafts sector, which employs many, has been included in the VKGUY scheme which will enable exporters to get import duty reimbursements of up to 5% of the total value of exports. It will cost the government about Rs 150 crore annually.

With the global financial meltdown increasing the risk of defaults, the government has decided to give back-up guarantee to the export credit guarantee corporation to the extent of Rs 350 crore.

Another significant decision which will improve fund availability is allocation of Rs 1,100 crore to ensure full refund of terminal excise duty and central sales tax. Exporters will also be allowed refund of service tax on foreign agent commissions of up to 10% FOB value of exports.

They will also be allowed refund of service tax on output services while availing of benefits under the duty drawback scheme. This is significant as a large number of exporters were not able to get service tax refunds because of the clause. “We had to try hard to convince the finance ministry that drawback does not include service tax,” Mr Pillai said.

To encourage exports, the government has eliminated export duty on iron ore fines and reduced duty on lumps to 5%.

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Revision of Excise and Customs Duty Rates and Service Tax Refund to exporters

To provide a fiscal stimulus to the economy through stimulation of demand and relief to the manufacturing sector, Government has carried out certain changes in Excise and Customs duty rates. Some changes have also been made in respect of Service tax refund scheme for exporters. The details of these changes are as under:-

I.Central Excise

The three major ad valorem rates of Central Excise duty viz. 14%, 12% and 8% applicable to non-petroleum products have been reduced by 4 percentage points each. The revised rates will be 10%, 8% and 4% respectively.

Cars, other than small cars, attract composite rates – that are a combination of specific and ad valorem rates. The rates applicable hitherto were ‘24% + Rs.15,000/-` per unit for cars of engine capacity 1500 cc to 1999 cc and ‘24% + Rs.20,000/-` per unit for cars of engine capacity of 2000 cc or more. The ad valorem component of these rates has been reduced from 24% to 20%.

In the case of cement, which attracts either the ad valorem rate of 12% or specific rates (Rs./metric tonne) depending upon the retail sale price, the specific rates have also been reduced in the same proportion as the ad valorem rate. Further, the concessional rates for cement produced by mini-cement plants have also been reduced proportionately. Bulk cement would now be chargeable to either 10% ad valorem or Rs.280/- per tonne, whichever is higher.

The rate of duty on cotton textiles and textile articles has been reduced from 4% to Nil. No change has been made in the excise duty rates on petroleum products, specific rated items and tobacco products.

Notification No.58/2008-Central Excise and Notification No.59/2008-Central Excise, both dated 07.12.2008 have been issued in this regard.

II. Customs duty

To provide relief to the power sector, naphtha imported for generation of electric energy has been fully exempted from basic customs duty. This exemption will be available upto 31.03.2009. Notification No.128/2008-Customs dated 07.12.2008 has been issued in this regard

III. Export duty on iron ores

The export duty of 8% on iron ore fines has been withdrawn while the rate of export duty on iron ore lumps has been reduced from 15% to 5% ad valorem.

Notification No.129/2008-Customs, and Notification No.130/2008-Customs both dated 07.12.2008 were issued in this regard here today.

IV. Service Tax

Notification No.41/2007-Service Tax provides for refund of service tax paid by exporters on 18 taxable services attributable to export of goods. The benefit of such refund has now been extended to services provided by a clearing and forwarding agent to exporters also. In addition, the threshold limit of refund of service tax paid by exporters on foreign commission agent services has been enhanced from 2% of FOB value to 10% of FOB value of export goods. Further, drawback benefit can now be availed of simultaneously with refund of service tax paid in respect of exports. Notification No.33/2008-Service Tax, dated 07.12.2008, amending the aforesaid notification No.41/2007-Service Tax was issued in this regard here today.

V. All the aforesaid changes are effective from 7.12.2008.

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Sunday, December 7, 2008

Government Announces Measures for stimulating the Economy

The Government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem.

The first priority was to re-assure the people of the stability of the financial system in general and of the safety of bank deposits in particular. To this end, steps were taken to infuse liquidity into the banking system and also to address problems being faced by various non-bank financing companies. These steps have ensured that the financial system is functioning effectively without suffering the kind of loss of confidence experienced in the industrialised world.

Having assured stability of the system, the Government has focussed its attention on countering the impact of the global recession on India's economic growth. On the monetary side, the RBI has sought to pump sufficient liquidity into the banking system to enable bank credit to meet the expanded requirements of the economy keeping in mind the contraction in credit from non-bank sources. Banks have been provided adequate liquidity through a series of reductions in the CRR and additional flexibility in meeting the SLR requirement. Interest rate reductions have also been signalled by reductions in the repo and reverse repo rates, the most recent of which was announced on Saturday when both the repo rate and the reverse repo rate were cut by 100 basis points. Access to external commercial borrowings has also been liberalised so that borrowers capable of accessing funds from abroad are allowed to do so. The banks are being encouraged to counter what might otherwise become self-fulfilling negative expectations by enhanced lending to support economic activity.

These measures in the area of money and credit are being supplemented by fiscal measures designed to stimulate the economy. In recognition of the need for a fiscal stimulus, the government had consciously allowed the fiscal deficit to expand beyond the originally targeted level because of the loan waivers, issue of oil and fertilizer bonds and higher levels of food subsidy. In addition, the following steps are being taken:

1. Plan Expenditure:

In order to provide a contra-cyclical stimulus via plan expenditure, the Government has decided to seek authorisation for additional plan expenditure of upto Rs 20,000 crore in the current year. In addition, steps are being taken to ensure full utilisation of funds already provided, so that the pace of expenditure is maintained. The total spending programme in the balance four months of the current fiscal year, taking plan and non-plan expenditure together is expected to be Rs.300,000 crore.

The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in plan expenditure as part of the budget for next year.

2. Reduction in Cenvat:

As an immediate measure to encourage additional spending, an across-the-board cut of 4% in the ad valorem Cenvat rate will be effected for the balance part of the current financial year on all products other than petroleum and those where the current rate is less than 4%.

3. Measures to Support Exports

i) Pre and post-shipment export credit for labour intensive exports, i.e., textiles (including handlooms, carpets and handicrafts), leather, gems & jewellery, marine products and SME sector is being made more attractive by providing an interest subvention of 2 percent upto 31/3/2009 subject to minimum rate of interest of 7 percent per annum

ii) Additional funds of Rs.1100 crore will be provided to ensure full refund of Terminal Excise duty/CST.

iii) An additional allocation for export incentive schemes of Rs.350 crore will be made.

iv) Government back-up guarantee will be made available to ECGC to the extent of Rs.350 crore to enable it to provide guarantees for exports to difficult markets/products.

v) Exporters will be allowed refund of service tax on foreign agent commissions of upto 10 percent of FOB value of exports. They will also be allowed refund of service tax on output services while availing of benefits under Duty Drawback Scheme.

4. Housing

Housing is a potentially very important source of employment and demand for critical sectors and there is a large unmet need for housing in the country, especially for middle and low income groups. The Reserve Bank has announced that it will shortly put in place a refinance facility of Rs.4000 crore for the National Housing Bank. In addition, one of the areas where plan expenditure can be increased relatively easily is the Indira Awas Yojana. As a further measure of support for this sector public sector banks will shortly announce a package for borrowers of home loans in two categories: (1) upto Rs.5 lakhs and (2) Rs 5 lakh-Rs 20 lakh. This sector will be kept under a close watch and additional measures would be taken as necessary to promote an accelerated growth trajectory.

5. MSME Sector

The Government attaches the highest priority to supporting the medium, small and micro enterprises (MSMEs) sector which is critical for employment generation. To facilitate the flow of credit to MSMEs, RBI has announced a refinance facility of Rs.7000 crore for SIDBI which will be available to support incremental lending, either directly to MSMEs or indirectly via banks, NBFCs and SFCs. In addition, the following steps are being taken.

(a) To boost collateral free lending, the current guarantee cover under Credit Guarantee Scheme for Micro and Small enterprises on loans will be extended from Rs.50 lakh to Rs.1 crore with guarantee cover of 50 percent.

(b) The lock in period for loans covered under the existing credit guarantee scheme will be reduced from 24 to 18 months, to encourage banks to cover more loans under the guarantee scheme.

(c) Government will issue an advisory to Central Public Sector Enterprises and request State Public Sector Enterprises to ensure prompt payment of bills of MSMEs. Easing of credit conditions generally should help PSUs to make such payments on schedule.

6. Textiles

(a) An additional allocation of Rs.1400 crore will be made to clear the entire backlog in TUF Scheme.

(b) All items of handicrafts will be included under 'Vishesh Krishi & Gram Udyog Yojana'.

7. Infrastructure Financing

A large number of infrastructure projects are now being cleared for implementation in the Public Private Partnership mode. These projects may experience difficulty in reaching financial closure given the current uncertainties in the financial world. In order to support financing of such projects, Government has decided to authorise the India Infrastructure Finance Company Limited (IIFCL) to raise Rs.10,000 crore through tax-free bonds by 31/3/2009. These funds will be used by IIFCL to refinance bank lending of longer maturity to eligible infrastructure projects, particularly in highways and port sectors. In this way it is expected that IIFCL resources used for refinance can leverage bank financing of double the amount. Depending on need, IIFCL will be permitted to raise further resources by issue of such bonds. In particular, these initiatives will support a PPP programme of Rs.100,000 crore in the highways sector.

8. Others

(a) Government departments will be allowed to take up replacement of government vehicles within the allowed budget, in relaxation of extant economy instructions.

(b) Import Duty on Naphtha for use in the power sector will be eliminated.

(c) Export duty on iron ore fines will be eliminated and on lumps will be reduced to 5%.

The Government is keeping a close watch on the evolving economic situation and will not hesitate to take any additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.

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Saturday, December 6, 2008

Exporters may get back benefits available earlier

The big export relief measures for which the besieged exporters are looking forward to on Saturday would largely comprise restoration of benefits already bestowed on exporters that were withdrawn in recent period such as interest subvention, due payment of arrears of terminal excise duty (TED)/Central Sales Tax (CST), services tax and higher drawback and DEPB (duty entitlement pass book) rates.

Highly-placed sources said that the export relief measures to be announced tomorrow would broadly cover these aspects so that exporters, reeling under disconcerting drop in overseas orders and high transaction cost, would be left with some flow of funds to salvage the situation.

They said that not a single service tax to exporters has been refunded by way of notification so far even though the intent has been declared widely.
Policy rates

The sources said that as the RBI is all set to announce on Saturday some cuts in policy rates with banks being asked to push down interest cost, exporters must perforce also to hold on to existing markets for which they need “a little bit of stimulus”. The sources said that once a lower policy rate is unveiled by the central bank to be followed by lower interest rate by banks, exporters would also be given an interest subvention on export finance, especially those in the labour-intensive export segment such as textiles, gems and jewellery, marine products, leather of minus 2 per cent that would cost Rs 250 crore in the next four months.

The restoration of drawback and DEPB rates from the recent cuts would cost another Rs 250 crore in the next couple of months, while there would be refund of services tax on output services and foreign exchange commission to benefit the exporters.

They said the arrears of TED/CST running to Rs 600 crore would be settled now, while the Export Credit Guarantee Corporation (ECGC) would be given a backup of Rs 350 crore to extend risk coverage to exporters. The sources said that the Commerce Ministry is worried that Indian exporters have to contend with every other country providing at least one per cent tax rebate to get export orders in a shrinking market and the least the government could do is to help them realise some of the benefits guaranteed to them under the statute.
Ministry perspective

Asked how the Commerce Ministry views the prospects for exports after the relief measures would be put in place tomorrow, the sources conceded that the department has drawn two scenarios—the most optimistic being that overall exports during the current fiscal would register a 10 per cent growth in dollar terms and the least optimistic being that there would be a decline of 4 per cent in export growth of $162 billion the country compassed during 2007-08. They said the exporters have orders only up to January next and the subsequent months would be difficult to sail through.

The sources said that a survey of 121 companies across the country and across industry revealed that job losses estimated was 65,000 in the last three m months and the prediction is that the aggregate job losses in industry due to declining exports and declining demand would be 12 lakh this year.

The sources said that even the Special Economic Zones (SEZs) have been facing difficulty in exports and in places like electronic SEZ at Santa Cruz, the zone authority has informed the officials in the Commerce Ministry that 25,000 less number of casual employees passes do not get picked up. “This is at a time when casualisation and contractualisation of labour has been the most important labour reform imperceptibly supervening in India between 1991 and 2008”, the sources quipped.

To a specific query about any move to diversify markets for exporters, the sources said that India’s exports to the United States and the European Union (EU) account for only 35 to 38 per cent with the remainder going to Africa, East Asia and Latin American countries. “That is why the Ministry has sought higher assistance for focus market and focus market schemes to help exporters send out delegation and mount trade fairs for buyer-seller interface,” the sources added.

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Friday, December 5, 2008

Global meltdown wipes out Rs 1,792-cr export orders

NEW DELHI: A government survey of the export sector has thrown up a grim picture of severe job losses and order cancellations. Senior government officials have warned of many export units closing down and thousands of jobs being lost if a bailout of exporters is not launched soon.

A survey of 125 companies by the commerce department has revealed that the companies lost export orders worth Rs 1,792 crore during August-October 2008 and were forced to lay off 65,000 workers.

The commerce department had carried out the survey to find the extent of hit exporting units had taken due to the global financial meltdown and the resulting credit squeeze and demand slowdown.

A senior official in the commerce department said that if steps to bail out exporters are not taken now, “not hundreds but thousands of units will close down within a few months”.

The exporters are suffering on many counts. While there is lower demand from foreign buyers due to recession in the Western economies, banks in India are also not willing to honour letters of credit. This is making it difficult for exporters to fulfil whatever little orders they have. In October 2008, exports growth entered the negative territory for the first time in five years, registering a fall of 12% from a year ago.

The official pointed out that the problem in the country was not of inadequate liquidity but unwillingness of banks to give loans to exporters. “We were amazed to find out that banks were actually asking some exporters not to take additional orders,” the official said.

The committee of secretaries working on the incentive package for the industry has been discussing a mechanism to ensure there is no slowdown in lending. According to the plan, to be executed by the financial services department in the finance ministry in cooperation with banks, loans made by various branches of banks will be noted and bank managers asked to explain the reason in case a slowdown is noticed. Bankers will be asked to meet SME entrepreneurs to address their problems.

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Wednesday, December 3, 2008

Safeguard levy to fight cheap imports

NEW DELHI: The government is examining a plan to impose safeguard, or temporary, Customs duties to help sectors such as steel and chemicals fight a surge of cheap imports, notably from China, officials say.

It has also asked the local industry to help identify products which have seen a big rise in imports in the past few months, as it looks to use all weapons in its arsenal to protect domestic manufacturers, they said.

The government has expedited anti-dumping investigations against cheap imports of a large number of items, mostly from China, and has imposed import restrictions on products used by the automobile and construction industries.

“Imposition of safeguard duties is another option for protecting the domestic industry we can explore. We are putting in place the mechanism which would allow us to take action against import surges,” a government official, who asked not to be named, said.

While anti-dumping duties are imposed if it is established that a country is exporting goods at prices lower than what it is sold for locally, safeguard duties can be imposed if there is a surge in imports leading to market disruption and serious injury to domestic industry.

Since demand in India’s traditional export markets such as the EU, US and Japan is drying up due to the global economic downturn, the government is keen to ensure the domestic industry is protected by catering to the growing domestic market. It is, therefore, exploring a variety of measures to check cheap imports.

The domestic steel industry, hit by falling international prices and imports from China, has received help from the government in the form of fast anti-dumping investigations and import curbs restricting imports of items such as seamless pipes and tubes to only actual users.

“For products where anti-dumping duties cannot be imposed, the Centre can consider imposing safeguard duties,” the official added.

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