Free Consumer Goods Imports To Affect Fdi

The Federation of Indian Export Organisations (FIEO) yesterday said free import of consumer goods would affect the inflow of foreign direct investment (FDI) into India.

Foreign companies may desist from setting up shop in the country if they have the choice of directly marketing their products. This may reduce FDI inflow into the country, FIEO director general R K Dhawan said.

Dhawan said the government had relaxed import restrictions on certain specified items in a hurry and called for some hard bargaining so that the developed countries in Europe and America would also reciprocate such measures.

At present, the developed countries are hiding behind the garb of concessions offered by the WTO till 2005 by imposing various non-trading restrictions, he said adding the regional grouping in tariff structure should be done away with.

 

The commerce ministry on Saturday had announced moving of 69 specified items including escalators and moving walkways, polaroid cameras, fixed focus 35 mm cameras, glass items etc from the special import license list (SIL) to free list.

Dhawan, however, conceded that the phased removal of restrictions was inevitable as India was a signatory to the WTO.

Meanwhile, the Associated Chambers of Commerce and Industry (Assocham) said the relaxation of import curbs and inclusion of consumer goods in the free list was in line with the thinking of the chamber.

Assocham secretary general V Raghuraman said the Indian industries would face some hardships due to the relaxations but added the domestic industry has to raise up to the challenges.

It is our view that the consumer gets the best bargain and the move would certainly infuse competition in the system, Raghuraman said.

It might be noted that the apex chamber had made hue and cry recently by urging the government to restrict the foreign equity participation in consumer goods industry to 40 per cent.

Dhawan said the Indian exporters do not have a level playing field as a result of high tariffs imposed by many countries in Europe, America and Africa.

The Netherlands has imposed a steep import tariff of 20 per cent on floriculture products exported from India even while maintaining a lower rate for other developing countries, he said.

Dhawan pointed out similar disadavantages faced by Indian exporters and also implored the government to improve the infrastructure.