FTAs with lack of reciprocity hurting domestic industry: PPMAI

The Process Plant and Machinery Association of India Wednesday expressed concern at the surge of metal and capital goods imports from countries like Korea, Indonesia, Malaysia and Japan with whom India has agreements to promote free trade.

"The Free Trade Agreements (FTA) coupled with lack of reciprocity is adversely hurting the steel manufacturers as well as the capital goods industry. FTAs are meant to increase bilateral trade.

"However, India's FTAs with ASEAN countries and Japan have only resulted in increasing our imports of metals and capital goods with either stable or declining exports leading to the rising trade deficit," said Yatinder Pal Singh Suri, Chairman, Process Plant and Machinery Association of India.

PPMAI represents the capital goods and process equipment manufacturing and exporting industry in the country.

"Despite several steps taken by the government including imposing anti-dumping duties, countervailing duties, quality control and anti-circumvention measures the problem of surge in imports especially stainless steel, finished capital goods and other metals persists," said Suri.

He said the excess capacity in China and FTA countries such as Japan, Indonesia and Korea and their ambition to sell at lower than domestic price levels due to zero duty advantage in Indian market is posing a stiff challenge to the domestic metal manufacturers and capital goods industry.

"FTA should be a level playing agreement and not a one way street as it is currently prevailing. Currently, all FTA countries are taking full advantage by exporting metals as well as finished capital goods into India but they are not importing metals and capital goods," Suri said.

He proposed a quota system wherein if the trade balance in a particular sector is in the range of +/- 30 per cent, it is fine but if the equation gets worse, the imports from FTA countries should not be duty free.