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QR bogey not to weigh heavily on Sinha

Notwithstanding the fears about the floodgates of imports in the post QRs-era, removal of quantitative Restrictions (QRs) from April this year is not likely to weigh heavily on Finance Minister Yashwant Sinha who is busy giving final touches to his Budget for 2001-2002.

The bogey of QRs and the Chinese threat to the domestic industry has also not made much impact in the commerce ministry, which has since given its inputs for the Budget to the North Block. Commerce and Industry Minister Murasoli Maran has already made it clear that there is no justification for taking the tariff to a peak level.

''If the tariffs were to be taken to the peak, there was no need for removal of QRs,'' Maran had said.

This is not to suggest that the commerce ministry is not keeping a watch on the import scenario. In fact, Maran made a commitment in a meeting of the Parliamentary Consultative Committee that the government would bring in legislative measures to safeguard the interest of the domestic industry.

However, official sources said that in the unfolding situation, there is not much alternative before the Indian industry but to compete with the best in the world in terms of quality, standards and prices.

After making an allout pitch for raising a big wall of 'tariffication', a dominant section of the Indian industry has come to realise the futility of creating a panic situation.

''It should be resorted to only if it is absolutely essential. Any attempt to raise duties in the process of 'tarrifising' would exert pressure on the average customs tariff level already at a high of 28 per cent,'' the Confederation of Indian Industry (CII) said.

A CII study has indicated that 241 out of the 715 items on which QRs are to be removed are already in the Special Import Licence (SIL) and would not immediately affect the domestic industry.

''The premium on SIL is at a nominal rate of 0.30 per cent,'' it said.

The list of 715 items on which QRs will go includes 331 items of textile and textile articles out of which 101 are already allowed for import against SIL and the balance 230 are in the restricted category.

'' Many of the restricted items would require changeover from existing 'ad-valorem' rate of customs duty to 'ad-valorem' or specific rates whichever is higher, '' the CII study said.

Even the experience of the past does not suggest any big dent on the bottomline of the domestic industry. Import increase has been noted only for a few items like umbrellas, locks, toys, dry battery and rubber. Only 11 items out of 714 items on which QRs were removed last year, witnessed imports of Rs 100 million in the first half of the current financial year.

The commerce ministry is handling the situation for these items through initiation of the anti-dumping duties.

The domestic industry itself is sharply divided on the level of 'tariffication' needed to safeguard its interest. While the capital goods manufacturers want increase in the duty on machinery, the user industry like textile would like to import the equipment at zero duty for modernisation.

Amidst these pulls and pressures, the bogey of QRs itself becomes weak and the finance ministry would certainly take note of it, knowledgeable sources said.

UNI

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