DGTR proposes import duty hike on synthetic rubber from South Korea under CEPA

Amiti Sen New Delhi | Updated on May 16, 2020

Following complaints from Reliance Industries, basic customs duties to be provisionally raised to MFN levels for 200 days

Responding favourably to a complaint made by Reliance Industries against a surge in import of polybutadiene rubber from South Korea (used for making tyres), at a concessional customs duty under the India-South Korea free trade pact, the Directorate General of Trade Remedies (DGTR) has recommended a provisional increase in import duties to levels applicable on all countries.

“On the basis of the preliminary determination, it is provisionally concluded that increased imports of subject goods have caused serious injury and also threat of serious injury to domestic producers. It is considered that critical circumstances exist where delay in imposition of safeguard measures would cause irreparable damage to the domestic producers,” as per preliminary findings of a safeguard investigation carried out by the DGTR.

Reliance Industries, the only manufacturer of polybutadiene rubber in India, had pressed for the duties but the move is being opposed by domestic tyre manufacturers who are in favour of cheap imports.

The DGTR provisionally recommended increasing the rate of basic custom duty on imports from Korea (from zero per cent) to the level of MFN duty (basic customs duty) prevailing on the day the safeguard measure is applied or the rates prevailing on the day preceding the implementation of the trade agreement, whichever is lower. At present, the basic customs duty on the item is 10 per cent.

The provisional safeguard duties will be applicable for a period of 200 days, after it is approved by the Finance Ministry, within which the DGTR will come up with its final report following further investigations and comments based on its preliminary findings.

Highlighting the magnitude of distress caused by the duty cuts on the domestic industry, the report pointed out that on full application of duty concessions under the India-South Korea Comprehensive Economic Partnership Agreement (CEPA) in 2017-18, share of imports of the product from South Korea in total imports surged to 54 per cent during the year from 37 per cent in 2016-17 and 16 per cent in 2007-08.

“As a result, sales of the domestic producer declined significantly in the most recent period (April-September 2019). Further, profitability of the domestic industry has also suffered significantly in this period and incurred losses in the second quarter of 2019-20. The sales volumes in April- September 2019 were 8 per cent lower than volumes sold in 2015-16,” the report added.

The DGTR invited comments from all stakeholders within 30 days from the date of issue of the preliminary findings (May 12). These comments would be examined in the final findings.

Published on May 16, 2020

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