Hoda panel to review industry plea on CTV, tyre duties

NEW DELHI: The government has asked industry bodies CII and Ficci to prepare an inventory of sectors suffering from the incidence of inverted duty structure due to free trade agreements signed by India.

The two bodies will prepare detailed reports on the existing duty structure in affected sectors like colour televisions, picture tubes and tyres. The reports are likely to be submitted next month to the Hoda committee, which is looking into the issue.

The final changes proposed by the committee on inverted duty structure, headed by Planning Commission member Anwarul Hoda, is expected to be incorporated in the ’07 Budget, government sources told ET.

An inverted duty structure emerges when import duties on the finished product is lower than that of the intermediaries. The government decided to set up the committee following a stream of complaints by the industry alleging that tariff concessions extended to India’s FTA partners was creating an inverted duty structure for certain products.

The protests were loudest after the implementation of the early harvest programme (EHP) with Thailand in September ’04 involving phased duty elimination for 82 identified products.

According to industry sources, the EHP with Thailand has adversely affected the markets for colour picture tubes, electric fans and transmission assembly.

While the import duties on colour picture tube is 12.5%, the duty on glass parts, a key input, is 15%. Similarly, electric fans attract a duty of 15% while the import cess on the input iron alloy coil is 20%. The import duty on transmission assembly at 15% is the same as the import duty on its raw materials like bearing and rubber parts.

Manufacturers of tyres for cars, trucks and buses have also taken a beating due to the various bilaterals signed by India. The import duty on natural rubber has remain unchanged at 20% while the import duty on tyres is 15% and lower under various agreements.

From China and South Korea, India’s main competitors in tyres, the import duty is 12.9% (Asia Pacific trade agreement). Under SAPTA, import duty on tyres is 7.5% while from Sri Lanka, tyres can be imported under the India-Sri Lanka FTA.

The colour television manufacturing industry is also under strain due to competition from both Thailand and Singapore. While import duties on colour television is 6.25%, the duty on colour tubes is 12.5%. From September 1, ‘06, the import duty on colour televisions from Thailand will be scrapped.