A suspected abuse of the India-Asean free trade agreement (FTA) by unscrupulous suppliers from countries like China necessitated a non-tariff restriction on television imports, which couldn’t otherwise have been controlled with a mere duty hike, an official source told FE. The move is also aimed at promoting domestic manufacturing of the electronic product, which has improved dramatically over the past year, another official said.
In a late-night notification on Thursday, the Directorate General of Foreign Trade (DGFT) put coloured TV imports under the “restricted” category, which means traders have to seek licences to buy these products from overseas.
Customs officials have long suspected that China may be diverting its supplies to India via Asean nations, abusing rules of origin, to illegally take advantage of the duty-free market access under the FTA. Given the latest border skirmish and the frosty political ties, the diversion may surge, they fear.
The TV industry in India is worth about Rs 15,000 crore — 36% of which is in the form of imports, primarily from China and Vietnam. In 2018-19, however, as much as a half of domestic demand was met through imports. This has now dropped due to growing domestic manufacturing.
Interestingly, in FY19, China made up for 53% of India’s total TV imports of $1,012 million, followed by Vietnam (33%) and Malayasia (11%). In the last fiscal year, of the $781-million imports, China’s share dropped to 38% and Malayasia’s eased to just over 2%, but Vietnam’s contribution rose to as much as 55%. While Vietnam is also emerging as a major electronics supplier, it’s quite possible that a part of the Chinese supplies is diverted through Vietnam, given the sharp fluctuations in trade value year on year.
In fact, after Singapore and Hong Kong, Vietnam has emerged as the third Asian trade partner, which counts on massive Chinese investments to turn its usual trade deficit with India into a decent surplus in a span of just three years. Between FY18 and FY20, India’s trade balance with Vietnam swung from a surplus of $2.8 billion to a deficit of $2.2 billion, according to official data.
As for promoting local production, under a phased manufacturing programme (PMP) for TVs, certain parts like open cells, chips on films, printed circuit boards assembly are exempted from import duties. “Hence, India is ready for shift of manufacturing to India with cost effective imports of essential parts (if required),” one of the officials said.
The government has stepped up consultations with industry to curb substandard and non-essential imports, and replace these with domestic production. The government has also decided to review FTAs with trading partners, including Asean, Japan and South Korea.
Source:- financialexpress.com