Industry opposes anti-dumping duty levied on pen drives

The government’s proposal to impose anti-dumping duties on Chinese and Taiwanese pen drives is being opposed by the industry, fearing a rise in prices that would result in grey market spread.

The sector is also confused over the provenance of the devices, while domestic companies’ lacking of the ability to manufacture these would impact the demand-supply equation.

The Directorate General of Anti-Dumping & Allied Duties (DGAD) has proposed to levy duties of $3.12 (Rs 199) per unit imported from China and $3.06 (₹195) for those from Taiwan.

DGAD will now send its findings, which were finalised after an investigation for calendar year 2012, to the finance ministry for a final decision.

“This will put a huge burden on the consumers. Also there is no rationale of imposing duty on high capacities such as 32 GB, 64 GB and 128 GB or USB 3.0 technology products where domestic players have no demonstrated presence or capability,” said Ashok Chandak, Chairman of India Electronics and Semiconductor Association.

Flash memories, manufactured in Japan and Korea, are the major costs of USB products and these devices mainly are assembled and tested in China and Taiwan, he added.

Anti-dumping duties are imposed to protect the domestic industry from unfair competition, especially on suspiciously low-priced imports or goods below cost prices.

“The bigger worry is that this will result in emergence of grey market in the country, not to mention the direct impact it would have on prices,” said Anwar Shirpurwala, Executive Director at Manufacturers’ Association of Information Technology (MAIT).

According to industry data, the present demand for USB sticks in India is at about 25-30 million units per year, of which nearly 99 per cent is imports.

“We are confused as to what is Chinese or Taiwanese. These are all global manufacturers – Japanese, South Korean and US firms – and these companies are assembling these devices,” said Vishnu Bhandari, CEO of IT distributor Supertron Electronics. According to the industry, flash drives are IT products covered under WTO Information Technology Agreement List and no custom duty is levied, even though 6 per cent countervailing duty is levied on the MRP.

At present, domestic prices of these drives are at par with global prices, while there are about 20,000 channel partners selling these in the country, according to Suresh Pansari, director at distributor Rashi Peripherals.