The Department of Revenue notified a long list covering 464 items which are eligible for concessional duty when imported from the four Bangkok Agreement country set consisting of China, Korea, Sri Lanka and Bangladesh on 1 September. The list is a big jump over the previous list which covered just 74 items. The Bangkok Agreement itself has been rechristened as APTA which stands for Asia Pacific Trade Agreement. With this, India has dropped its reference to China as an East Asian country to accept the American reference to the land of the dragon as a nation on the Pacific coast.

India has already armed itself with countervailing duty instruments to protect its industry from zero duty import under the APTA notification. It inserted a condition this year that full four percent special CVD will be levied on APTA imports even in zero duty cases under APTA. This will ensure that a minimum protection wall is always available to local industry. Their production has a good chance of absorption by the global multinationals who will be forced to look at local vendors too in their sourcing plans.

A comparison of the items in the current and previous notification shows that the cuts in the additions to the list range from five to 15 percent as percentages of the existing tariff rates of 12.5 percent is one of the main beneficiaries. Thus a cut of 10 percent will translate into a net reduction of applicable duty by 2.5 percent with the 10 percent cut on the tariff rate of 12.5 percent. Even as 50 percent cut will mean a reduction of only 6.25 percent in the final duty. In actual practice, there are few industries where such small changes will lead to significant rise in imports, the inflow is determined by low prices in China or Korea. In most cases, Indian industry is quite competitive and even a full zero duty will not bring in imports. Of course, the profit margins will come down since there is monopoly prices as an option will not be possible due to the threat of imports at low duty.

There is no change in the nine items in the agriculture sector. This sector has emerged as some kind of holy cow, the government is shielding the sector from the forces of change in the globalizing world in the name of the poor farmer. Ultimately, this will only kill its future growth and erode its ability to reap the market which will eventually emerge after the removal of subsidies and protection in the developed countries.

Some 67 items have been inserted in the chemical sector. The number of lines may look large but the actual numbers are not all that many since the insertions are at six digit HS level which covers many variations of the same items unlike the four digit which deals with broad groups. A beginning has been made in plastics with the inclusion of PMMA which will enjoy 15 percent discount on the normal tariff. Rubber tyres are a new entrant in APTA to break the monopoly of the local tyre industry. Plywood and related items are also in the new list. Another eight lines in the paper industry will get concessional duty, apart from the existing 13 lines.

There is no change in silk but a beginning in opening up is visible in cotton fabrics, another holy cow under protection in the name of the cotton farmer and poor handloom weaver. There is no movement in synthetics, only knitted fabrics is affected with the insertion of 17 lines. Glass is a big entry in the new list with as many as 16 lines. There is little change in steel but white goods like ACs and refrigerators have entered the scene but with a cut of just five percent on the applicable tariff of 12.5 percent. Textile machinery, computers, electronics industry are covered to an extent but, unfortunately, there is nothing at all in motor vehicles which could do with some competition specially when the vehicles are from the home country of multinationals resident in India. There is some movement in instruments but nothing on watches where the only insertion is that the out of date watch with mechanical instruments.

A new set of rules of origin was also notified to ensure that only goods with substantial value addition in one of the four APTA countries get the concession. There are now a large number of windows for goods to enter the country at concessional duty. Bangladesh has access to two other agreements for concessional duty entry into India, the FTA between India and Sri Lanka provides for zero duty entry on most goods. The ASEAN too has made a beginning on entry into Indian market, India has bilaterals with Singapore and Thailand on trade. The big one with ASEAN as a whole is already on the drawing board. India is now taking its due place in the middle rank in the line of global players.

The Department of Revenue has very fine officers at the CBEC level who have experience of running complex and modern day field formations in India and outside. However, the appraiser has no instructions on how to apply the exemption. For example, will the concession under APTA apply on exemption notification with conditions. An amazing gap in governance is visible at the operational level. Even more amazing is that the gap is deliberately left so that every customs clearance becomes a law battle between the appraiser and the importer.