The metal
scrap importers have got one month’s breathing space to meet past
commitments under the Public Notice issued on 28 April 2006. Bills of
Lading issued till 1 August will be cleared by the customs on the basis
of the previous system of certificate of “no explosive shells” from the
approved pre-shipment inspection agencies. Once the transition period
ends, the new registration procedure for foreign suppliers will be the
only window open for the bills of lading issued after the cut of date
of 1 August 2006. The last date for filing applications for
registration of metal scrap suppliers in the foreign countries was
extended by one month to 31 May 2006. The DGFT is accepting
applications by email also to increase the system through put.
The trade is not too happy with the new supplier registration system
since it works against the system of the market. Loose metal scrap is
collected from diverse centres in the globe and delivered to the users
in India located in distant places in a highly complex operation
involving many financial, logistics and legal sub systems spread over
many countries. However, in the supplier registration system, the
supplier is fixed and so is the importer who can only be the actual
user, that is, the final manufacturer. The system has no flexibility,
the trader at the various points in the supply chain is not in the
picture at all. The net result is high transaction cost to the final
user which is ultimately born by the consumer in an already over heated
industry.
Second hand capital goods:
DGFT has cleared a major road block in the way of free import of second
hand capital goods. It says that a declaration by the importer at the
time of customs clearance to the effect that the goods are not
remanufactured is adequate. This should get over the objections of the
customs officers who are treating all second hand goods as
remanufactured and asking the importer to get a license from the DGFT.
It may be recalled that in the recent Supplement to the Foreign Trade
Policy, remanufactured goods, what ever that means, were put on the
restricted category and the free treatment limited to second hand
capital goods other than remanufactured goods.
It remains to be seen whether the customs officers follow the DGFT
circular. They are likely to devise their own procedure for determining
the lack of manufacture in the second hand goods. It is believed that
the bulk of capital goods import into India in the second hand
conditions since Indian industry can ill afford the high prices of the
new machinery.
Used machinery may require some repairs from time to time but the cost
of manufacture is far lower than comparative new machinery. The catch
in the new FTP will trip many users and defeat the goal of promoting an
open and free economy.
CD dumping investigation launched:
The Moser Baer led eight party combine under the banner of Optical Disc
Manufacturers Welfare Association petition of dumping CD-Rs was
admitted for investigation by the designated authority on 4 April. The
users of common CDs, known as CD-Rs in trade circles (WORM, Write Once
Read Mostly), are condemned to a high price regime coupled with a grey
market fed by smuggled CDs of dubious quality. The retail price of a
CD-R in India is Rs 15, which is high compared to the Rs. 5 import
price from Taiwan or China sources, according to DGCIS Kolkata figures,
Hong Kong is even lower at just Rs 3.50 per piece.
The anti
dumping investigation on imports will kill the Rs 120 crores official
import market with the heavy impost and the current price of Rs. 15
will go up in the absence of import competition.
Normal value in the case of China is constructed from the international
cost of production which is permissible on account of the non market
status of China. In the other cases of imports from Hong Kong, Taiwan
and Singapore, it is alleged that the domestic price is higher than the
export price to India resulting in a positive dumping margin. (The US
is outside the investigation process even as its export price at Rs. 7
per piece is comparable to Singapore). The total impact of the imports
from the offending five, known as “cumulation” in anti dumping lingo,
is alleged to have injured the members of the Moser Baer led
association of eight. It seems that the injury parameter largely
consists of potential losses of market share, profit and so on in the
hypothetical event of the removal of the dumping companies from the
scene. The injury investigations covers four years but dumping actions
during the one year period ending 30 September 2005 will be considered.
Our own investigations show that the import market is doubling every
year in terms of both quantity and value. India has given zero customs
duty status to CD-Rs to promote the IT culture in the country to bring
the industry into the main stream of the globalization currents.
Imposition of the anti dumping duty on CDs will move us to the side
current due to the erection of barriers in the working of the market.
Low cost mass storage devices are key to IT operations. Today, a blank
DVD which stores a huge 4.7 GB of data consisting of a full length
movie is available in the market for just Rs 70. Distortions in the CD
market will cripple the IT sector and reduce the trade gains envisaged
in the zero duty IT regime. As it is, IT goods bear a crippling 16.32
percent and four percent countervailing duty which is an unfair
imposition since there are no like goods manufactured in the country.
The government may be well advised to launch a comparative cost audit
to check why the members of the CD association are not able to produce
at internationally competitive prices and reduce the burden of taxes
and rigid laws on them.
Exporters wait:
The FTP Supplement was released on 7 April. The demise of the DFRC to
provide duty free to market related access to raw material took place
in 1 May but the substitute Import Authorisation Scheme is still born.
The customs notification and the export procedure nowhere in sight. The
users of DFRC are waiting for the customs and DGFT notifications on the
details. Apparently, the co-ordination between Finance and Commerce is
not so good in spite of the announcement of the agreed FTP on 7 April.
