It is difficult to get excited over the fact that the import of wooden dolls, hair-nets and rubber bands has been moved to OGL (open general licence), along with some 300-plus othersincluding plain water. Because although some items of consumer goods (like shaving equipment) can now be imported, and so also some agricultural products, the fact is that the changes fall short of what should have been done; equally, the procedural changes which the commerce minister has chosen to stress are mostly cosmetic. If the opening up is significant, it should lead to imports of the items placed on OGL. But the odds are that nothing much will come inpartly because of the high tariff regime that exists.
Imports belong to five categories - OGL, restricted, SIL or special import licence (a sub-set of the restricted category), canalised and prohibited; and five major product groups are covered through quantitative restrictions (QRs). These are agro-based products, consumer goods, textiles, petroleum and products and urea. The commerce ministry follows a harmonised 8-digit classification that describes around 10,500 items. Around 3,000 items are on QRs, with around 2,700 on the restricted list. Interest in the exim policy naturally focused on what would happen to the QR regime.
There is already a dispute with the US that is pending, and the WTO will review Indias trade policy soon. Given that there is some compulsion to phase out QRs over the next five years, around 500 items have to be moved to OGL every year. Such movements can take place in two ways, by moving items directly to OGL, or routing them to OGL via the SIL list. Mr Hegde has fallen short of the target of 500. Altogether 340 items have moved directly to OGL and an unspecified number to the SIL category.
This is not enough to satisfy either the WTO or Indias trading partners, and a further liberalisation can be expected later this year. Logically, liberalisation should address decanalisation as well as the restricted list but the commerce minister has stayed away from this issue. An exim policy should also address exports, but the speech only touches on this and promises a policy soon.
If one scans the 98 chapters covered in the import classification, Mr Hegde has chosen his items from the entire range, with some focus on fish, shrimps, moss and lichen, vegetables and fruit, some chemicals, tanning and dyeing, cork, straw, and fabrics. The advantage of such a choice is an increase in the number of items that seem to be liberalised. Yet Mr Hegde has played down even these changes, as though he does not want to advertise it too much. Such coyness would be becoming if the changes were in fact significant, which they are not.
