Consumer Durables Industry Hopes Misuse of FTAs will be Curbed

With the government stepping up vigilance on imports of electronics, white goods, set-top boxes, mobile phones from countries with which India has free trade agreements (FTAs), the consumer durables industry is hoping that issues surrounding the misuse of the FTA route to bring in cheaper imports while escaping duties will get addressed.

Pankaj Mohindroo, Chairman, India Cellular & Electronics Association, said that the industry body has consistently been highlighting to the Finance Ministry and Commerce Ministry that “infringement of value addition in the rules of origin and mis-classification are damaging the domestic manufacturing industry.”

“We are glad that the rules needed to enforce Section 28DA, which was introduced in the 2020 Union Budget, have been notified. We are confident that Customs authorities will use these rules judiciously to come down heavily on unethical and errant importers and at the same time ensuring that genuine importers’ operations are not disrupted,” he added.

The government will focus on stricter verification of rules of origin for imports from FTA countries from September 21. Industry players said that rules of origin are the most important criteria needed to determine the national source of a product and duties and restrictions in several cases depend upon the source of imports. The industry has been raising concerns about imported goods from China being brought into the country through the FTA route.

Scrutiny on import origin

Avneet Singh Marwah, CEO, Super Plastronics Pvt Ltd (SPPL) said this kind of scrutiny is much needed as some brands have been misusing the FTA route to import products in the television and appliances categories without much of the value addition being done in that particular country.

“There have been instances of goods being imported through the FTA route into India, where such goods consist of a large proportion of components from non-FTA countries or sometimes do not meet the other prescribed rules of origin criteria. Strict action is required to ensure level playing field for domestic manufacturers,” he said.

Kamal Nandi, President, CEAMA said, “We have also been raising concerns about inverted duty structures under FTAs, where finished goods do not attract any duty, whereas components attract duties. The industry is working closely with the government to focus on curbing imports of finished goods and look at how we can promote domestic manufacturing.”