TN seeks 100% duty on Tapicoa, starch & sago

The Tamil Nadu government has requested the Centre to raise the tariff rates of customs duty on tapicoa, starch and sago to 100 per cent and to raise the effective rates to at least 60 per cent urgently as the sago and starch industry is facing serious problems.

The average price of starch per bag sold in domestic markets came down to Rs 827 per bag from Rs 1,081 in August 2003 as a result of the abolition of special additional Duty (SAD) and the reduction in customs duty.

Chief minister J Jayalalithaa has sent a letter to the Prime Minister of India, Manmohan Singh, to bring to his notice that the average price of starch has fallen to Rs 827 and also has requested a raise tariff rates.

In the Union Budget for 2004-05, the tariff rates of customs duty for tapicoa starch, sago and modified starch have been raised to 50 per cent although the effective rates of customs duty for these commodities remain at 30 per cent, 30 per cent and 20 per cent respectively. Under the WTO agreements, the bound rates of customs duty for tapioca starch, sago and modified starch have been set at 100 per cent 150 per cent and 150 per cent.

The Government of India on January 1, 2004 had abolished the SAD of four per cent and the reduction in customs duty on modified starch from 30 per cent to 20 per cent has resulted in indiscriminate imports from Thailand, Indonesia, Vietnam, China and Netherlands, the chief minister added.

There are about 450 starch and sage small scale manufacturing units operating in the districts of Salem, Namakkal, Dharmapuri, Erode, Tiruchirappali, Perambalur, Villupuram and Tiruvannamalai in Tamil Nadu. The industry provides employment to 70,000 workers directly and indirectly, majority of whom are women. About 1.2 lakh farmers in these districts are dependent on the cultivation of tapioca which is the raw material for the starch and sago industry.

Over the past 60 years, the tapioca industry in Tamil Nadu has been the backbone of the rural economy, as eight districts produce nearly 90 per cent of India's total requirement of sago.

During the period from 2000-01 to 2003-04, the imports of starch increased four-fold from 2455 metric tonnes to 9,800 metric tonnes the imports of sago nearly eight-fold from 306 metric tonnes to 2,320 metric tonnes and modified starch from 3568 metric tonnes to 4,597 metric tonnes.

The statement further added that taking this as a matter of concern, the Director General Safeguards, New Delhi initiated action in July 2004 for the levy of safeguard duty in terms of rule 5 of the Customs Tariff (identification and assessment of safeguard duty) Rules, 1997.

This action has to be completed to protect the local industry and the safeguard duty on these three commodities may be levied for a maximum period of eight years.