Centre likely to impose 25% safeguard duty on single-mode optical fibre

The Centre is likely to impose a 25 per cent import safeguard duty on single-mode optical fibre, and a notification on the same is expected soon, Business Standard has learnt.

 Late last year, companies like Sterlite Technologies and Birla Furukawa Fibre had filed an application with the Directorate General of Trade Remedies (DGTR) seeking imposition of safeguard duty on the fibre.

Imports in the category jumped three times to $ 180 million in 2018-19, from only $51.3 million in the preceding year. The sudden spike is because of the government buying the fibre for its BharatNet programme. 

In November, the DGTR had proposed a provisional safeguard duty of 25 per cent for a period of 200 days. This was after it found that cheaper imports -- primarily from China, but also South Korea and Japan -- flooded Indian markets. As a result, domestic companies had to lay off workers and close down manufacturing units last financial year. The capacity utilisation and market share of firms earning profits until 2017-18 were also hit, despite an increase in demand.

The government was expected to take action after 21 days were given for public comments on the findings. That period has now ended.

Among a plethora of other high-value items, single-mode optical fibre is used for the manufacture of optical fibre cables. As a result, it has been on the government's radar since such cables are the mainstay of the ambitious BharatNet programme, established in 2017. BharatNet promises to create network infrastructure allowing affordable broadband connectivity of 2 Mbps to 20 Mbps for all households and institutions nationwide.

Optical cables transfer digital data signals in the form of light up to distances of hundreds of kilometres with higher throughput rates than those achievable via electrical communication cables. These use a core of hair-like transparent silicon covered with less refractive indexed cladding to avoid light leakage to the surroundings. Because of the extreme sensitivity of the optical fibre, it is normally covered with a high-strength, lightweight protective material like kevlar.

As a result, despite being more expensive, the National Optical Fibre Network (NOFN) has decided to put its faith in optical fibres. The NOFN aims to connect every single of the 250,000 gram panchayats across the country with broadband, providing 100 Mbps of minimum speed. To achieve this, the existing fibres of public sector undertakings like BSNL, RailTel and Power Grid were utilised and incremental fibre was laid.

While the government plans to raise import duties to provide a breather to domestic manufacturers, the fate of mega infrastructure projects like the NOFN may become uncertain as the existing manufacturing capacity is low, a senior official said. To boost domestic production in the short run, the government may also announce additional incentives for fibre cable production under the electronic ministry's Phased Manufacturing Programme.

Getting right of way is a major challenge since municipal corporations and gram panchayats often refuse to allow cables pass through their land, said a person in the know. The same issue is not faced by electrical or sanitation lines since their direct benefit is evident to the populace. As a result, the industry has asked for being considered as a priority sector, with requisite government support.