The Department of Revenue (DoR) fears that a minimum import price (MIP) for marble higher than its international price is leading to black money coming into India through hawala route or stashing away of the money in tax havens.
To curb it, DoR has asked the director general of foreign trade (DGFT) to consider doing away with the steep MIP on marble which stands at $325 a tonne. The government has imposed MIP, which is nearly double the international market price of about $150 a tonne, to protect the domestic industry which employes a large number of poor people. The revenue department has based its recommendations on the special investigative team (SIT) report flagging the issue. “The huge differential between the international market price of marble and the minimum import price has become a black money problem. We have written to the DGFT to look into the matter,” said an official.
So, basically, the money going out of the country when a trader imports marble is $325 a tonne but since the prevailing international price is nearly half of that at $150 per tonne, the surplus is coming back to the country through the hawala route or is being stashed abroad, he explained.
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The department of revenue has asked for removal of MIP, bur DGFT is concerned that such a move will lead to a hue and cry from the domestic industry. “A file has been put up asking for removal of MIP. But we can’t outrage the domestic industry, so will have to look for a middle ground in this matter,” said a DGFT official.
The marble industry in Rajasthan is estimated to employ 2,00,000 families from the backward classes, tribal groups and minorities. “People are over-invoicing.. This has become a method of parking your funds outside,” said a finance ministry official.
India imported marble worth close to $223 million in 2014-15. High- quality marble blocks are mainly imported from Italy, Turkey and Egypt. Imports from China have also gone up over the years. The industry, especially hotel and real estate, has been demanding marble imports under open general licence category to end monopoly of a handful of importers selling marble at an exorbitant price.
The European Union has questioned import restrictions by India on rough marbles and marble products at the World Trade Organization back in 2013 and sought rationale behind such curbs. Besides MIP, India has in place a quota of 8,00,000 tonnes for import of rough marble and travertine blocks. With black money law in place, the importers are now scared of using the over-invoicing route of importing marble and have requested the government to address the anomaly.
“Earlier, there was no law on black money, so people were comfortable parking money outside. Now, they are very scared,” said a finance ministry official. Experts also pointed out that such a high MIP was not helping either the industry or the government. “This is an old problem and must be addressed suitably by the government. Instead of MIP, the government could look at imposing tariff line valuation, which will meet the requirement of marble manufacturers, give the government high duty and ensure that foreign exchange doesnot go out of the country,” said Ajay Sahai, DG and CEO of the Federation of Indian Export Organisations.
