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FTA misuse hitting Indian manufacturing units - PPMAI

Mar 7,2019

The Process Plant and Machinery Association of India (PPMAI) have expressed concern at the surge of imports especially of metals and Capital Goods from countries with whom India has signed Free Trade Agreements (Korea, Indonesia, Malaysia, and Japan).

 

Mr. Yatinder Pal Singh Suri, Chairman PPMAI, said “The Free Trade Agreements coupled with lack of reciprocity is adversely hurting the steel manufacturers as well as the capital goods industry FTAs are meant to increase bilateral trade. However, India’s FTA with ASEAN countries and Japan have only resulted in increasing our imports of metals and capital goods with either stable or declining exports leading to the rising trade deficit. Despite several steps taken by the government including imposing anti-dumping duties, countervailing duties, quality control, and anti-circumvention measures but the problem of a surge in imports especially stainless steel, finished capital goods and other metals persist.”

 

Excess capacity in China and FTA countries such as Japan, Indonesia and Korea, and their ambition to sell at lower than domestic price levels due to zero duty advantage in Indian market is posing a stiff challenge to the domestic metal manufacturers and capital goods industry It has become a huge problem. Jobs are getting lost and causing tremendous disruption.

 

FTA should be a Level playing agreement and not a one-way street as it is currently prevailing. Currently, all FTA countries are taking full advantage by exporting metals as well as finished capital goods into India but they are not importing metals and capital goods. In such cases, there has to be a quota system. It is strongly proposed that as long as the trade balance in a particular sector is in the range of +/- 30 percent, it is fine but if the equation gets worse, the imports from FTA countries should not be duty-free.

 

By allowing unlimited and unregulated access to Indian markets, the potential for our domestic industry to grow is being killed and at the same time derailing the Make in India policy. To save our manufacturing industry in India a fair and win-win agreement with the FTA countries needs to be developed.