Govt mulls safeguard duty on four more products

The government is looking at imposing safeguard duty on at least four more products to protect the domestic producers from surge in imports.

Government officials told Business Standard that the Directorate General of Safeguards (DGS) under the finance ministry was processing four complaints from domestic producers in this regard. “If the directorate finds that there is merit in the application, it will launch an investigation to ascertain the extent of the damage,” said a government official in the know. These products relate to chemicals, metals and some manufactured items.

Safeguard duty is an emergency import tax that is imposed temporarily on products that witness a surge in imports. As the ongoing financial crisis shaved off demand, companies based abroad have started exporting their products at very low prices in an attempt to recover at least the fixed costs.

In the January-April period, the DGS launched investigations on 13 products, mostly related to chemicals and metals sectors. It has recommended imposition of provisional safeguard duty on 11 of these products in its preliminary findings.

The Central Board of Excise and Customs (CBEC) has imposed duties on soda ash, certain aluminum products as well as phtalic anhydride.

DGS is the designated agency in India that investigates complaints of domestic producers regarding surge in imports. In the period after December 2008, the directorate has seen the complaints go up.

After consultations with domestic producers, importers of the product as well as the overseas exporters of the product, the directorate can recommend imposition of a provisional safeguard duty for a period of 200 days. For this, the industry has to prove that the import surge has adversely impacted it.

The CBEC then can impose the recommended duty.

Meanwhile, the directorate can continue investigating the matter by organising public hearings, after which it comes out with the final findings on the matter. While doing this, the DGS can either revoke the duty or recommend an extension for a maximum period of four years.

The industry can also approach the commerce ministry on complaints related to surge in imports. The Directorate General of Anti-Dumping and Allied Duties can recommend imposition of anti-dumping duty, another additional import duty. But this process is long drawn and could take up to six months before the investigation is complete.

According to a recent report released by the World Trade Organization, India topped the list of countries that launched new anti-dumping investigations — 42 were launched in the July- December period of 2008.