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QR removal: Govt denies import surge threat

G. Srinivasan

NEW DELHI, Feb. 25

EVEN as the Congress staged a massive rally here on Sunday to draw attention to the plight of farmers as the remaining import curbs are set to be brought down by March 31, 2001, the Government refuted any threat of abrupt import surge so far on this coun t as enough defence mechanisms were in place.

Highly-placed Government sources told Business Line that though quantitative restrictions (QRs) were removed for 757 items (714 tariff lines) in the 2000 Export-Import Policy, as many as 249 items of these were not imported during the first seven months of the current fiscal from April to October, 2000.

The list of 757 items on which QRs were removed on April 1, 2000 included items which were by far the most sensitive from the standpoint of domestic production.

While imports during April-October 2000 showed an indicative growth of 14 per cent, at the micro-level an analysis of 45 most sensitive items in respect of which representations have been received by the Ministry of Commerce from various quarters, only 1 1 items have shown imports of more than Rs 10 crore, sources said.

However, some of the consumer items such as dry battery cells, umbrellas, glassware, rubber, apples, locks, toys, writing instruments have been found to be witnessing marked import increases, calling for some interventions by the authorities which had be en made, they added.

Levels of imports in excess for the first seven months noticed were largely in the case of those items that were required for export production, the sources said, adding that the Department of Commerce was weighing the policy option of evolving ``strateg ic tariff policy of lowering import duties for main export items at eight-digit level and safeguarding sensitive items''.

The sources maintained that among the items that are sensitive from the small-scale industry (SSI) sector, the import of quite a few items is detected to have been growing at high rates even during QR regime. Some of the items in this category include ru bber footwear, rubber sole with canvas upper/leather uppers, tin plate containers and steel furniture. But many items such as dibutyl phthlate, ammonium sulphate, wood working hand tools, table knives with fixed blades, weighing machines, control and swi tch gear have seen a sudden drop in the levels of their imports in the post-QR period, the sources said.

The sources concede that although dismantling of QRs is a vital component of the reform package, it is necessary to monitor import of sensitive items particularly in the agricultural and plantation sector. The official position was that free imports shel tered by reasonable tariff walls which can be brought down in phases would provide the necessary element of competition to the domestic industry and boost customs revenues which could be utilised for creating the industrial infrastructure and stabilising the macro-economic situation, the sources added.

They said that as per the phaseout of import curbs agreed with the US, the country has been removing QRs progressively over the past few years. Thus in 1999-97, India removed import curbs on 488 tariff lines, 391 in 1997-98, 894 in 1998-99 and 714 on Apr il 1, 2000. The process would be complete when import curbs are removed on the lingering 715 tariff lines on March 31, 2002. It might be noted that though the process of systematic removal of QRs began in 1991 following the country's trade policy reforms , the items on which QRs were removed during the span 1991-96 pertained to raw materials, components and capital goods.

But the process of removal of QRs on finished products and consumer goods began only after 1996. Thus, the initial phase of QR removal did not evoke any resistance as the Indian industry hailed it at large. But as the items on which QRs were removed from 1998-99 onwards included finished goods for which there was significant production capability, it touched the raw nerves of indigenous industry.

The sources maintain that in recent months the Government has hiked customs duties on certain edible oils, wheat, rice, maize, apple, arecanut, sugar, tea and coffee, while beefing up the anti-dumping machinery to respond to distress calls of domestic in dustry where imports inflict material injury to it.

An inter-ministerial working group had also been set up to evolve appropriate steps to counter possible impact of removal of QRs with major industry representatives being roped in the whole exercise, the sources said.