The Hindu Business Line : Quota for milk powder, maize import hiked

IN WHAT may have been one of the last decisions of the outgoing National Democratic Alliance (NDA) regime — made just a day before counting of votes— the Government has permitted import of up to 1.5 lakh tonnes (lt) of milk powder and five lt of maize at a concessional 15 per cent customs duty.

Currently, import of both these commodities are governed by a Tariff Rate Quota (TRQ) system, wherein imports of a specified `in-quota' quantity are subjected to a special lower duty, with imports beyond these levels attracting the higher MFN (most favoured nation) rate.

In the case of milk powder (tariff codes 0402.10 and 0402.21 covering skimmed, whole milk powder and milk food for babies), import of up to 10,000 tonnes (t) during a financial year was so far charged a 15 per cent basic customs duty, while imports above this attracted a 60 per cent duty. Similarly, for maize or corn (tariff code 1005.90), annual imports up to 4.5 lt were subject to a 15 per cent duty, while quantities above this were charged a normal 50 per cent.

In a public notice on May 12 , the Directorate General of Foreign Trade (DGFT) amended the procedure for import of various items under the TRQ system. The quantity of milk powder that can be imported at the 15 per cent concessional duty was enhanced 15-folds from 10,000 t to 1.5 lt for the current fiscal. Further, up to five lt of maize can now be imported at 15 per cent customs duty.

``We were never consulted on this decision. The Commerce Ministry has assured us that the notification would be withdrawn, but the question is how was it issued in the first place and what was the logic behind it?" the Managing Director of the Gujarat Co-operative Milk Marketing Federation (GCMMF or Amul), Mr BM Vyas told Business Line. What is more intriguing is the timing of the decision.

A move to amend the TRQ procedures is something that should ideally have been left to the new Government, said industry observers.

The TRQ system for import of milk powder and maize was instituted in June 2000, following India's successful re-negotiation of tariff bindings on a host of agricultural commodities under Article XXVIII of the General Agreement on Tariffs and Trade (GATT). These renegotiations, under the auspices of the World Trade Organisation (WTO), involved the US, the European Union and other `principal supplying interests' agreeing to India increasing its bound tariffs on crucial farm items. In return, these countries were given similar reductions in other products of their interest.

The country had, in 1947, as part of the Geneva Protocol, bound its duties at zero per cent on around 15 sensitive items, including rice, milk powder, maize, jowar (sorghum), millets and milk powder. The zero tariff-bindings were made at a time when the country was not self-sufficient in most farm products and imposing import duties did not make sense.

``What is the need to increase the quantity of imports eligible for the concessional duty now when there is no dearth of milk here and domestic powder prices are ruling at a reasonable Rs 85-86 per kg?'' Mr Vyas quipped.

In case of maize though, there is no such controversy, according to officials. This is because Article XXVIII renegotiations in late-1999 provided for a bound rate of 15 per cent initially for 3.5 lt of imports in 2000-01, to be enhanced by 50,000 t annually till they touched five lt, which now has been reached.

Besides maize and milk powder, crude sunflower seed or safflower oil (tariff code 1512.11) and refined rape, colza and mustard oil (tariff code 1514.91 and 1514.99) are also covered under the TRQ system. While imports of up to 1.5 lt annually attract 50 per cent duty for the former and 45 per cent for the latter, quantities beyond these levels are uniformly charged 75 per cent duty. The latest DGFT public notice has made no changes with regard to either the in-quota quantities or duties in these commodities.

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