Govt plans to re-impose QRs

According to Commerce and Industry Minister Murasoli Maran, the Bill would be sent to the Cabinet for its formal approval, thereafter it would go to Parliament. The finance ministry has already implemented the first stage by passing a legislation in Parliament to amend the Customs Tariff Act, 1975 empowering it to impose a safeguard duty to protect the domestic industry from acceleration in imports.

Official data shows that both at the macro and micro levels, the removal of QRs has not altered either the overall import growth, rate of imports or even their composition.

After QRs were removed even on finished goods, the import growth rate, in fact, came down to 13.2 per cent during 1996-97, 11 per cent during 1997-98, 14.2 per cent during 1998-99, 13.6 per cent during 1999-2000 and 14 per cent during the first half of 2000-01.

However, a surge in imports of items, which are ‘relatively more efficiently manufactured by other countries cannot be ruled out.

There shall be closures, relocations and migration of factories to more deficient segments of the economy such as IT services, the commerce ministry has warned.

The bound rates are fixed at a certain level, beyond which the customs duties cannot be raised under WTO rules. Thus, they are ceilings on tariff rates. The applied rates of duties are lower than the bound rates. This gives the government sufficient cushion to raise the applied rates up to the bound rates in order to protect the domestic industry from the fall-out of removal of QRs.