Stringent ‘rules of origin’: Copper, paper imports fall
Govt seeks to check dumping of such products from non-producing nations
India’s imports of copper, RBD (refined, bleached and deodorised) palmolein, paper, and paperboard are likely to decline in coming quarters due to stringent norms being put in place on “rules of origin” to check the dumping of these commodities under Free Trade Agreements (FTAS) from non-producing countries.
Faced with a sharp increase in imports of copper, RBD palmolein, paper, and paperboards either at “nil” or “preferential”, lower customs duties, thereby hurting local producers, Indian manufacturers have repeatedly urged the government to curb imports of these commodities from non-producing countries at lower duty.
Like developed nations, India too encourages trade with countries including Nepal, Bangladesh, and Sri Lanka in Asia at either “nil” or “lower than normal” customs duties. But in the Union Budget 2020, Finance Minister Nirmala Sitharaman emphasised the need to strengthen “rules of origin” under FTAS to curb import with malicious intent from non-producing (trading) countries.
“It has been observed that imports under FTAS are on the rise. Undue claims of FTA benefits have posed threat to domestic industry. Such imports require stringent checks. In this context, suitable provisions are being incorporated in the Customs Act. In the coming months we shall review ‘Rules of Origin’ requirements, particularly for certain sensitive items, so as ensure that FTAS are aligned to the conscious direction of our policy,” the minister said in her speech. India imported around 190,000 tonnes of RBD palmolein in recent months from Nepal.
Since there is no palm kernel-processing facility in Nepal, the imported RBD palmolein is feared to have originated in Malaysia. While direct imports of palmolein attract 44.5 per cent, import through Nepal could be possible at “nil” duty under the South Asian Free Trade Area (SAFTA).
“Exports of RBD palmolein from Nepal to India flout rules of origin and value addition with impunity and therefore should not be allowed under any circumstances. Such imports will hit revenue collections of the government, in addition to affecting the domestic oilseeds processing industry and farmers,” said B V Mehta, executive director, Solvent Extractors’ Association (SEA).
Under the FTA, 35 per cent value addition to the free on board (FOB) value of goods in the exporting country is a must. Today, exporters add shipping and other miscellaneous costs including handling, loading and unloading, etc. to achieve the mandatory norms of 35 per cent.
“In the case of copper, a value addition of 35 per cent is impossible. There used to be huge imports of refined copper bars from Sri Lanka and Vietnam until recently, but they were curbed after the government removed copper bars from the commodities list under FTAS. Similarly, imports of copper from other FTA countries can be restricted for the benefit of local producers,” said Rohit Shah, managing director, Perfect Valves, a city-based refined copper importer.
The import of paper and paperboards from non-producing countries is a matter of great concern for Indian manufacturers.