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:111t 11-Japan,
seoul, Asean have rnade locally-produced
soods
less cornpetitive
',1'i:i,
i t t ; l r l r o dor r r est i c pr ot t uc: t i on, '
sa
jd
thr.t ofl' jr: ial quotecl
earlion
' flre
complexilv arises from thcr
lact that the raw material of a par.
t i cul ar f i ni shed product (i rl ent . i -
fled fbr tiuty inversion) is also a
part of input for some other sec-
tor. For exarnple, several compo-
nents in a steam boiler are also
used in other industries.
One exarnple of the inverteri ciu.
t t r' st r' 1. l ct l i r0 i s t hc 10% basi c Cus_
f
()t n: i f i i l t , , ' t nt . pi )$erj on t vl . es whi l c
t l t t {-l Lrsl orns r: l rr t y on i t s key i npr. l t .
- nl l Ll l ul
l Lr bbur - i s20uz"
"' T' yre
impor.ts enjoy prefieren-
!ia.l
duty' under Inclia-Asean ti'TA,
Sri Lanl<a F lA. Singapore CFi-
( A. . . r vhj ch
l eads t o i mpol r s at
concessional r' ates ii.om vanous
cc,Ltntries ranging frour 0% t0
8. 69; ,
j ncreasi ng
t he i nci cl ence of
rnr, ' crsi on^" sai d t he F i cci report .
I l r. i t y on rrri ; bcr i s hi ghi opr: ot ect
tlre 12lahh rubber growers
of thr:
cor.rntry Ficci, in its study has
ideutil)ed nlrie rnanufactlring
sccl \ ) l ' s
- , ul unr i ni unr
pr oduct s,
cap l t ai goods. cenrcnt . chcmi cal s,
el f i ct ronl cs. paper, st eel , t ext i l cs
and lyres**which have duty in-
versi0ns, flagging these as being
i ni ml cal t o t he domest i c i ndust rv
.lndia anr,l South Korea signeci a
r:olnlrlt:hens.ive
economic part-
Ilership aijreement, which carne
into efli:r:t in 2010; where Inclia
agreed to clirninate duties on ?S
0lr
prodlrcts
imported from South
.Korea ori a Llustouls value basis.
CEl' ]A witir.lapan came into efl' ect
i rr 20. 1. 1. l (ort , a hi s al l . eady sought
a follcw ol the I:TA signed to
siortelt ihe tariff reduction time
arr,:l reductiol of thesensitivelist.
DttAsf{A sETt{
NEW DELHI
fTl
he department of industri.
I
nl policy & promt_rtion
I (DI PP)has
sought recri f i ca-
tion of anomalies in the inverted
duty structure, arguing that they
are undermining domestic rnan.
ufacturing by making imported
finished goods cheaper.
In its budgetary consultations
with finance minister Arun Jait"
ley the department has said that
signing of free trade pacts with
Japan, SouthKorea andthe 10.na-
tion Asean has made locally-pro"
duced goods less competitive in
the Indian market.
An inverted duty structure
emerges when import duties on fin.
ished products
are lower than those
onparts/ rawmaterials, effectively
ilrcentivising imglrts of goods
rather than imports of par"ts
and in-
puts for local manufacturing.
India' s manufacturing sector
growth contracted 0.7% in 2013-
14, first time since 1991-92 when
the country embarked on eco-
nomic reforms.
The commerce department,
which has been under fire for a
whiie lbr agreeing to lopskfud
fice trade agreements (FTAs),
says nothing can be done on the
FTAs already sigled since ttrey
are agreements between two sov-
ereign governments.
It has instead sugges red forming
a smali committee to identifv
those raw rnaterials for which th-e
'most
I'avoured nation' rate could
be reduced without impactingthe
domestic mArket of those
prod-
rfr
,ffi
.
j
. r l r , , " r :
I .
J . l : I ,
. . i . i , . ,
1 . , ' , r , : . ' . , l , : :
. r :
i . r . : ; , l l
i
ucts. "We ag.ree in principle
that on raw material higher than rhat
rnere snoulo not be any inverted onfinishedproducts.
dtlty structure. But cannot do Dlpphascirculatedasturlyonin-
anything w ith the free trade pacts
verted duty stru.t,-,r..ona'rten
6y
3tre1{qsiened I{
a.*V inversion indusW body Ficci, seefrine co;i
nas ro oe remedled, it has to be ments and suggestions from vari
throughadjustmentof
MFNduty ous departme"rits to adclr.css the
on the raw materials, " sald a com- matter in the upcoming budget.
merce department official.
.,It
is complexasi:educingihe
d u
FIe said certain inversions are ty on a particular
raw material
necessarytoprotectthedomestic
may open import route from an,
in-dustry, so there is a need to iden- ottrer iountiyi W. fl""", u gs".Gi
tifq wfe1.e a higher duty on raw thatacommiiteebetbrmeiiibgive
materialisnecessary.
recommendations in a rnonitr,u
uerecrs 1n lndra' s duty regime time to identify those raw rnateri_
are also responsible for: duty in- als where rluty coukl U" ,rignifi
ve' sion, withbasiccustomsduty
canily reclucecr without it Lifreci
hverted drrty strurctt,rc lmpacting domestic manufa*rt*
,.*^,
% annualgrowth
,#,
2012-13
.t."i
ffi
uYo
2013- u' i l i #. di
[.'*HO'
fili{:i'
' r ' - - - - a