The Hindu Business Line : Grey imports make cosmetics sector see red

TROUBLED by rising `grey' imports or smuggled goods, particularly in the highly sensitive cosmetics industry, India Inc has urged the Government to take measures to tackle the issue and ensure a level playing field for the domestic player.

In a letter to the Central Board of Excise and Customs, the Federation of Indian Chambers of Commerce and Industry (FICCI) has submitted that, "suitable instructions should be given to field officials including customs, weights and measures, and food and drug administration inspectors, to enforce the existing guidelines with regard to import, labelling etc, to ensure a level playing field for the domestic industry in terms of payment of duties and labelling requirements for the benefit of consumers."

Though the customs and consumer affairs departments have issued various notifications from time to time, it is felt that such notifications are either ignored or not implemented while clearing products imported by unscrupulous persons, a FICCI official told Business Line. "It is felt that apart from adversely affecting the existing manufacturers and marketers, the grey imports which thrive due to under valuation, non-payment of taxes and non-confirmation of applicable laws in India, also work as a route for illegal money transfers," the chamber said.

It is estimated that the size of parallel imports of cosmetics could be of the order of about Rs 800 crore, which in turn leads to a loss of revenue of Rs 350-400 crore to the exchequer, the official said.

Suggesting certain measures to tackle the problem, the chamber has asked the Government to propose that all importers of packaged goods be required to specify the brand of product, apart from the generic category. The importers should also be asked to give the name and address of the original manufacturer in the bill of lading and customs clearance documents as well as submit the price list of the original manufacturer, to enable proper valuation of the imports, the chamber suggested.

The Government could stipulate minimum value for different type of cosmetic products, in consultation with the industry, which will form the basis for valuation so as to avoid under valuation of imports, the official stated."Further, the Government could also contemplate specific duties for such sensitive products where value differential could be high between imported and local ones," he said.

Further, the customs authorities should notify the local manufacturer or trademark owner or licensed importer of such imports, where he has duly registered himself with the authorities for this purpose to ascertain the legality of the import and also determine the proper value for levy of duty, the chamber said.

On the issue of storing and selling of imported products which do not conform to the quality parameters specified by the Bureau of Indian Standards (BIS) and labelling requirements prescribed under Weights and Measures (Packaged Commodities) Rules, the chamber said, "It should be considered as an offence with stiff penalty, including confiscation of goods."

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