7.
How will the Government protect the domestic industry especially the
SSI sector from possible adverse impact of removal of QRs? What are
the mechanisms available for it?
Tariff
protection for the domestic sector will continue to be available. Removal
of QRs does not imply duty-free imports nor does it mean removal of
all import controls. In fact, the Government can also raise the tariffs
against those items where the applied rates of duty are less than the
bound rates. However, it has been acknowledged that customs duty level
needs to be gradually lowered especially on raw materials and inputs
to reduce cost for our producers enabling them to compete more effectively.
Dr. Manmohan Singh in his 1994-95 budget speech had said: "I have
no doubt that the phased reduction of customs tariff is essential for
the long term interest of our industry." Mr. P. Chidambaram, in
fact, went a step further and said "we would achieve the average
level of tariff prevalent in ASEAN countries by the turn of century".
Out
of the 812 items reserved for the small scale industries (SSI) sector,
imports of as many as 576 items were already under Open General Licence
(OGL) prior to the current Exim Policy announced on 31st March, 2000
– that is to say, these 576 items could be imported freely without any
licence even earlier. Only 58 tariff lines, comprising 67 items of SSI
reserved list have been placed under OGL in the latest Exim Policy announced
on 31st March, 2000. Hence, bulk of the SSI reserved items were already
under OGL even before 31st March, 2000.
Moreover,
the QRs on all the items except a few canalised items (about 36 as on
1st January, 2000) had been removed since August 1998 for import from
the SAARC countries subject to their satisfying the "Rules of Origin"
criterion and this has not caused any major upheaval by way of any surge
in imports.
Further,
in case of unfair trade practices such as dumping of goods or subsidisation
of exports by other countries causing injury to the Indian industry,
anti-dumping or anti-subsidy actions can be taken by imposing anti-dumping
or countervailing duties (CVD) respectively. Similarly, if there is
a surge in imports causing serious injury to the industry, protection
under safeguard provisions is available. The industry can always approach
either the Anti-Dumping Directorate or the Safeguard Directorate for
appropriate relief. If the situation warrants, the Government has
the option to reimpose QRs.
Note
:
Dumping
means exporting a product at lower than its normal price which can
be assessed based on its domestic sale price or cost of production or
sale price in other countries.
Anti-Dumping
Duties are additional duties levied if there is dumping and
a causal link is established between dumping and injury to the domestic
industry.
Countervailing Duties
are duties levied against subsidies given to exporters by the exporting
country.
Safeguard
measures are steps which can be taken for a limited period in
consultation with the trading partners by increasing the tariffs even
beyond the bound rates or by imposition of QRs to protect a specific
domestic industry if there is a serious injury to the domestic industry
due to surge in imports.
