The Hindu Business Line : Jayalalithaa seeks import duty hike on tapioca starch

THE Tamil Nadu Government has asked the Centre to hike import duty on tapioca starch, sago and modified starch and exclude them from the Free Trade Agreement with Thailand.

In a letter to the Prime Minister, Dr Manmohan Singh, the Chief Minister, Ms J. Jayalalithaa, has requested that the effective Customs duty on these three commodities be raised to 60 per cent and the tariff rates to 100 per cent.

According to a copy of letter released to the media, indiscriminate imports have affected the domestic industry, which is concentrated in the districts of Salem, Namakkal, Dharmapuri, Erode, Tiruchi, Perambalur, Villupuram and Tiruvannamalai.

Over 450 starch and sago units, employing 70,000 workers, a majority of them women, and about 1.2 lakh farmers cultivating tapioca, the raw material, are under threat. Apart from this, in the last four-five years over 300 units have also closed down.

The abolition of Special Additional Duty of 4 per cent and reduction of Customs duty on modified starch to 20 per cent from 30 per cent in January 2004 have resulted in huge imports from Thailand, Indonesia, Vietnam, China and the Netherlands. Prices dropped to Rs 827 a bag from Rs 1,081 in August 2003, according to the letter.

The Union Budget in 2004-05 pegged the tariff rates of Customs duty for tapioca starch, sago and modified starch at 50 per cent but the effective rates remained at 30 per cent for tapioca starch and sago, and at 20 per cent for modified starch.

The World Trade Organisation agreement provides for bound rates of 100 per cent for tapioca starch and 150 per cent for sago and modified starch.

Therefore, there is scope to hike the effective rates for these commodities to protect the industry. The letter pointed out that following huge increases of imports of three items between 2001 and 2004, the Director General, Safeguards, New Delhi, initiated action in July 2004 to levy safeguard duty in terms of Rule 5 of the Customs Tariff (Identification & Assessment of Safeguard Duty) Rules, 1977.

This action has to be completed to protect the local industry, with the duty levied for a maximum of eight years.

The State Government also requested that the three items might be included under the negative list in the context of the Free Trade Agreement with Thailand.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page