Make In India: India Inc wants curb on Chinese imports, changes in duty structure

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Made in IndiaTuesday, December 30, 2014: Chinese imports need to be reduced, claims the Indian industry. The industry also wants that inverted duty structure should be revised and an import substitution policy should be designed to help improve domestic manufacturing sector in the country. A Make in India workshop was organised by the government and these issues have been raised during the discussions.

In order to protect domestic manufacturers from competition from Chinese imports, companies have urged the government that duties should be increased within bound rates at the World Trade Organisation, specifically in sectors like power equipment, capital goods and heavy industry, as revealed by an official to ET. India’s trade deficit in comparison to China stands at $36 billion, as exports are estimated at $15 billion with imports of more than $5 billion. Bound tariff means the uppermost level of import duty which is authorised by WTO.

India’s average bound tariff rate is 48.6 per cent and average basic customs duty is approximately 14 per cent. The government has also been requested by Indian companies, including Larsen & Toubro, that domestic content requirement norms need to be expanded further if they are to boost local manufacturing. This issue has also been a huge tension between India and the U.S. Earlier this year U.S. went to WTO over this domestic content requirement issue in the first two phases of the National Solar Mission. They alleged that discrimination has been done against U.S. based solar cell and module producers.

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According to an official, who has seen the developments closely, multinational companies have been strongly against local content requirement norms, but Indian companies like L&T asked for expansion of the norms to boost Indian industry. An industry insider revealed to ET that they are pretty hopeful about government’s acknowledgements of their demands in relation to inverted duty structure and protection of domestic market. One more senior government official disclosed that a list of some more items for inverted duty structure requirement has been prepared by DIPP and this list will be produced before the finance minister in the upcoming budget.

In the last financial budget, finance minister Arun Jaitley corrected inverted duty structure on several raw materials and intermediate products. The workshop had 18 sessions and it covered 25 identified sectors. The sectors included oil and gas, capital goods and micro, small and medium enterprises (MSME) and so on.

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