Industry to get cover against third country imports
The government has included a series of safeguards to protect the domestic industry from third country imports.
By Gaurav Malani, TNN |
NEW DELHI: To allay India Inc’s fears about Chinese goods using the proposed comprehensive economic co-operation agreement (CECA) with Singapore to enter India at a concessional duty, the government has included a series of safeguards to protect the domestic industry from third country imports. To be signed on Wednesday, the CECA envisages a 10% concession on import duty immediately for nearly 2,200 items from Singapore and gradual elimination of customs duty by ’09. Stringent rules have been incorporated to cover various areas, including rules of origin, local content and minimum value addition, government sources said.
If there is prima facie evidence that products from third countries are being routed via Singapore to benefit from the concessional duties provided by the CECA, the Indian government can demand physical verification of the manufacturing facilities of the exporter concerned. This provision has been based on past experience in case of Nepal, where it was reported that various goods, including edible oil imported from South-East Asia, were simply being re-labelled and shipped to India. Similar allegations from India Inc over granite imports had come up in the case of the free trade area (FTA) pact with Sri Lanka too.
The minimum value addition, for example, has been fixed at 40% in the case of Singapore. In the case of the FTA with Sri Lanka, the minimum value addition was fixed at 35%. Change in the basic nature of the product has also been made mandatory, sources said. This means that the tariff heading, under which the product is exported to India, should be different compared to the raw material imported by the Singapore-based exporter.
If there is prima facie evidence that products from third countries are being routed via Singapore to benefit from the concessional duties provided by the CECA, the Indian government can demand physical verification of the manufacturing facilities of the exporter concerned. This provision has been based on past experience in case of Nepal, where it was reported that various goods, including edible oil imported from South-East Asia, were simply being re-labelled and shipped to India. Similar allegations from India Inc over granite imports had come up in the case of the free trade area (FTA) pact with Sri Lanka too.
The minimum value addition, for example, has been fixed at 40% in the case of Singapore. In the case of the FTA with Sri Lanka, the minimum value addition was fixed at 35%. Change in the basic nature of the product has also been made mandatory, sources said. This means that the tariff heading, under which the product is exported to India, should be different compared to the raw material imported by the Singapore-based exporter.
Certification by Singapore’s customs department has also been made mandatory. In the case of previous agreements, the government had allowed certification by certain other authorities, including chambers of commerce. The protracted negotiations with Asean and Thailand over rules of origin have led the government to go in for more stringent rules. The government has also reserved its right to initiate anti-dumping or safeguard investigations against the goods imported from Singapore under concessional tariff facilities provided by the CECA. Officials feel that the pact with Singapore, the first of its kind for India, has been a major learning experience. The knowledge gathered during its negotiations will help India in drafting similar pacts in future.
Under the safeguard mechanism, India can revert the duty to normal levels if there is a surge in imports of a particular product from Singapore and it injures the domestic industry.
The concessional tariff facility will stand suspended in such cases, the sources said. In addition, future duty reductions will also be kept in abeyance in the case of such products. Talks on the CECA were co-ordinated by the ministries of external affairs, finance and commerce & industry.
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