FTA Sourcing for China Origin Goods in Crackdown under Planning

· Consumer Goods in Hit List

· Soyabean Oil from LDC Nepal and Bangladesh too in Crackdown

The government plans to slap higher import duties on a wide range of items that are made in China but are routed into India from countries with whom New Delhi has free trade agreements, meaning they are available cheaply at the expense of local manufacturers.

The items range from soybean to auto-components, electronics to vegetable oil, leather goods to textile products.

New Delhi also plans to tighten its rules of origin to boost domestic production, senior commerce ministry officials said.

Footwear, clothing, leather, watches and electrical equipment likes chargers are said to be in hit list.

The idea is to limit the import of counterfeit products and potentially save $15 billion.

It also found that between 20 per cent and 30 per cent of products imported into India come under the ‘‘other’’ category, accounting for around $130 billion of imports, and this is primarily done to avoid duties and taxes.

The committee also found a sharp surge in their imports from Singapore and Hong Kong after India imposed an anti-dumping duty on the import of the items from China.

In September, the government had notified customs rules which allow officials to demand proof of significant value addition for goods imported under preferential duty agreements.

The committee pointed that there has been a massive surge in soybean oil imports from Nepal and Bangladesh after the South Asia Free Trade Area agreement or SAFTA.

There was a 23,500 per cent increase in soybean oil imports since 2016-17 despite the fact both countries have limited production of soybean, and limited capacity to crush it.

“Soybean from China was in this case being routed through Nepal or Bangladesh by flouting WTO rules of origin for getting duty exemption provided under SAFTA,” it said, stressing the need to review existing preferential trade agreements that have placed Indian manufacturers at a disadvantage position.

“Despite complaints from importers of red tape, we still find a considerable re-routing as the spike in electronics imports shows,” said finance ministry officials. The government is considering bringing in self certification under rules of origin to address genuine importer concerns, while enforcing random checks to see that rules are being followed.