Cii For Scrapping Of Swadeshi Duty

The Confederation of Indian Industry (CII) will present a memorandum to the finance ministry seeking withdrawal of the 4 per cent across-the-board special additional duty (SAD) on imports.

The move follows the findings of a survey conducted by the apex chamber after the finance minister decided to reduce SAD from 8 per cent to 4 per cent, in which 35 industrial sectors have asked for the withdrawal of the duty as its is adversely effecting their competitiveness against imports.

Corporates from 35 industrial sectors have admitted in the survey that the increase in the imported cost of raw materials of the finished goods which they produce have had an adverse effect on their competitiveness even after the finance minister reduced the duty to 4 per cent. They said the impact has become worse due to the further devaluation of the rupee from Rs 41.69 in June 1, to Rs 43.26 to a dollar presently.

 

The volte face by the industry which had earlier asked for protection against foreign competition by an across the board increase in import duties of products has come under criticism from the finance ministry. In a close door session last week with CII members, advisor to the finance minister Mohan Guruswamy complained that industry had initially asked for protection and had later backed out of after the government conceded to their demand for protection.

This had compelled the government to reduce the special duty from 8 per cent to 4 per cent.

CII for instance had in its pre-budget memorandum asked for a 5% increase in import duty across the board as a measure to protect domestic industry.

The Federation of Indian Industry has also pushed for a 8% across the board import duty on all products. In a similar vein Finance minister Yashwant Sinha in a meeting with CII members in Bangalore on Tuesday has urged industry to be consistent in their demands for concessions from the government.

Speaking to Business Standard Tarun Das director general of CII explaining the reason for the flip flop by CII said: " CII has asked for a 5% additional duty in its pre budget memorandum."

But after the budget it became clear that additional duty had hurt many corporates which were using imported raw materials. CII requested reduction of this duty and FM reduced it from 8% to 4%". He further stated: "Consequently CII has received data from various industry sectors specifically asking FM for withdrawal of this duty completely because it is hurting their competitiveness against imports. CII is presenting the survey results to the Finance minister."

Das admitting that Indian industry had not been consistent in their demand on protection said: "One good thing that Indian industry across the board has understood is that high import duties are no longer a solution to their viability and competitiveness."

The survey asked corporates to identify the range of raw materials that they have to import in their sector. For instance IT companies informed that they import various items which include key parts and components of computers, populated PCBs, CD-Roms amongst others. Steel companies say that they have to import coking coal, ferro nickel, silicon metal, metallurgical coke amongst others. Capital good companies say that they import a wide range of products which include raw materials for manufacture of capital goods, flat rolled products of iron or non alloy steel, bars and rods of free cutting steel, alloy steel sheets amongst others.