The Hindu Business Line : Panel to study inverted duty

DISCUSSING FOREIGN TRADE: (From left) The Commerce Secretary, Mr S.N. Menon, with the Apollo Tyres Chairman and Managing Director, Mr Onkar S. Kanwar, and the Director General of Foreign Trade, Mr K.T. Chacko, at a national seminar on foreign trade policy in the Capital on Saturday. — Kamal Narang

New Delhi , April 8

A committee headed by a member of the Planning Commission has been constituted to examine various issues surrounding the inverted duty structure problem with respect to customs duty faced by domestic industry.

The Commerce Secretary, Mr S.N. Menon, stated this at a national seminar on foreign trade policy organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Saturday.

The Committee would comprise officials of the revenue and the commerce department. The recommendations of the committee would help the government solve the long-standing problem on inverted duty structure, Mr Menon said.

When it occurs

An inverted duty structure occurs when the import duty on the raw material is higher than that of the finished product. The Government's decisions to enter into free trade agreements often result in situations of inverted duty structure for the domestic industry. The domestic industry has been highlighting that inverted duty structure is prevalent in segments such as tyres, colour televisions and consumer electronics.

The Commerce Secretary also said that an expert group would be set up to look into the various aspects of taxation impacting the gems and jewellery sector. Mr Menon said that the slew of measures announced in the Annual Supplement for the gems and jewellery sector was aimed at converting India from a processing hub to a trading hub for gems and jewellery.

He also ruled out extension of duty entitlement passbook (DEPB) benefits to developers and co-developers of special economic zones (SEZs). The Secretary said that they already enjoyed a number of direct as well as indirect tax benefits under the SEZ law.

Import data

On the delays in collation of import data (from DGCIS), Mr Menon said that the government might have to impose penalty on customs house agents if they continue to make mistakes in the entry or filling up of data on imports.

He highlighted that there were was large-scale data entry mistakes leading to delays.

The demand of trade and industry to include meat products within the scope of the Vishesh Krishi Upaj Yojana was turned down by the Director General of Foreign Trade, Mr K. T. Chacko.

The trade wanted inclusion of meat products in the same way as the government had included poultry and dairy products within the coverage of the Vishesh Krishi Upaj Yojana.

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