More import restrictions in pipeline
March 24, 2009 13:15 IST
India can either impose anti-dumping duties or safeguard duties to tackle import surges. India may resort to more protectionist measures in the coming months, because of a huge surge in imports of many products in the period between April and December 2008.
Data available with
Business Standard show that a few products, which had been imported only in a very little quantity, have seen a sudden rush of imports.
"The surge in imports of many commodities during April to December 2008 could have impacted industries," said a senior government official. "Hence, we expect that the request for initiation of anti-dumping or safeguard duties will increase."
Anti-dumping and safeguard actions are initiated when the industry complains to the government with proof that they have been adversely impacted. The data collected by the commerce ministry will act as a trigger for industry groups to press for protectionist measures.
For example, imports of certain hot-rolled steel coil varieties surged about 14,278 per cent and stood at Rs 487.17 crore (Rs 4.87 billion) between April and December 2008, against Rs 3.38 crore (Rs 33.8 million) in the same period a year ago.
Imports of many other varieties of hot-rolled coil have also doubled and tripled in the same period.
Imports of radial tyres for commercial vehicles almost doubled and stood at Rs 267.34 crore (Rs 2.67 billion) in the period, up from Rs 137.72 crore (Rs 1.37 billion).
Similarly, for some categories of auto components where imports more than doubled and stood at Rs 175.39 crore (Rs 1.75 billion), compared with nearly Rs 80 crore (Rs 800 million) in the came period of 2007. Imports of coaxial cables doubled to Rs 336 crore (Rs 3.36 billion), against Rs 169 crore (Rs 1.69 billion).
The government officials say that if imports over a small period of time increase over 25 to 30 per cent, it can be termed as a surge. Imports had expanded 50 per cent in the April to December period and stood at Rs 10,03,947 crore (rs 10.03 trillion), over Rs 6,93,445 crore (Rs 6.93 trillion) in the corresponding period of the previous year.
The reason for the import surges can be partly ascribed to the year's depreciation of the Indian rupee against the dollar by more than 20
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India can either impose anti-dumping duties or safeguard duties to tackle import surges in the products. The anti-dumping process is initiated when the industry complains to the government with proof that the products coming into India are at a cheaper rate than the price at which they are being sold in the domestic market of the producing country.
In other words, the products under investigation are being dumped by producers based in some country.
"Dumping of products shows that the domestic consumption in the producer country has declined. Hence, the producers want to dump the products in some other country and retrieve at least the fixed cost," the official added. Anti-dumping duties are country-specific.
Safeguard action is initiated when the industry complaints about a surge in imports adversely impacting them. In this case, the product may not be dumped. This action has to be applied to all countries.
But in both these cases, the industry has to prove that there has been injury to them by the imports by lesser sales, declining production and loss of market share. Procedures related to safeguards are easier than that of anti-dumping.
Certain industries like hot rolled coil producers have already complained to the government. "If such high rate of imports is allowed, the domestic industry will be wiped out. We have asked for initiation of both anti-dumping and safeguard duties," said an executive of a large steel producer.
"While Indian HR coils cost nearly Rs 30,000, imported ones are available for about Rs 21,000. This leads to a double whammy, as demand in the economy is down. Moreover, Indian factories have long-term contracts with their raw material providers. As a result, cost overheads are high," the executive added.
Auto component manufacturers are investigating the import spike. "We are trying to understand if the spike in imports took place in the period after October, when there was a slowdown. If that has happened, then we can tell the government that the imports have substituted domestic production," said Vishnu Mathur, executive director, Automotive Component Manufacturers Association.
