Not a great start for India's importers and exporters in the New Year

The importers ended the last year with apprehensions about more non-tariff barriers and the exporters began the new year with worries about a more difficult global trading environment and withdrawal of some government support.

 

Last week, the government imposed minimum import prices for soda ash and brought low ash metallurgical coke under import licensing.

 

The Director General of Trade Remedies (DGTR) issued various notifications relating to imports of polyvinyl chloride resin, rubber vulcanisation chemical sulfenamide accelerators, untreated fused silica, halo-butyl rubber, soft ferrite cores, and toluene di-isocyanate. Earlier in the year, the government had brought more items under import licensing (for example, parts of pocket lighters), under import monitoring systems (e.g. melon seeds, electronic chips), under minimum import price requirement (e.g. threaded articles i.e. screws of iron and steel, synthetic knitted fabrics) and under quality control orders (e.g. bolts, nuts and fasteners, plain paper copier, caustic soda, flat transparent glass, safety glass).

 

All these non-tariff barriers were in addition to many items already placed under similar restrictions or requirements in recent years. The government seems intent on protecting domestic producers by making it difficult to import.

 

Donald Trump, who will take over as President of the United States, has threatened to hike import tariffs across the board, and impose high tariffs on imports from China, Canada, Mexico and India. He may also target other countries with specific intent to protect the domestic producers. His actions may provoke retaliation from other countries. Already, the global trade is somewhat fragmented with the US and its allies stopping all trade with Russia.

 

Another development is the economic slowdown in China forcing many of its companies to sell their products at very low prices in the international markets. Such competition at low prices is already making it difficult for our exporters to retain their customers.

 

The government had made available the Remission of Duties and Taxes on Export Products (RoDTEP) scheme to exports in discharge of obligation against advance authorisations and exports by export-oriented units and special economic zone units till the end of last year.

 

The exporters were expecting extension of the scheme but no notification for extension has come through till now. Meanwhile, the Jawaharlal Nehru Customs House at Nhava Sheva issued a trade notice effectively asking such exporters not to opt for the RoDTEP scheme in the shipping bill but later withdrew the instructions.

 

Apparently, the scheme is not continued for such exporters for want of allocation of funds by the finance ministry. Exporters find this justification difficult to accept because the scheme only seeks to give back to exporters the taxes that they have already paid to the government.

 

The government had made available the interest equalisation scheme for a select category of exporters. The scheme enabled the exporters to get export credit at a lower rate of interest enabling them to compete better in the global markets. The government had made the scheme available till the end of last year. The exporters were expecting an extension of the scheme but no communication to that effect has come in till now.

 

Thus, it is not a great start for the exporters and importers in the New Year. Hopefully, the global trading environment will not deteriorate too much and the government will also reconsider its stand on RoDTEP benefits and interest equalisation scheme for exporters.