INDIA PLANS TEXTILE DUTIES TO PROTECT LOCAL INDUSTRY

INDIA PLANS TEXTILE DUTIES TO PROTECT LOCAL INDUSTRY

The government is preparing to levy countervailing duties on textile imports to protect domestic industry.

India agreed last December to open its textile market in phases according to bilateral agreements with the United States and European Union. But it reserved the right to protect its domestic industry during the transition period.To create what is seen here as a level playing field, countervailing duties of between 5 percent and 25 percent are expected to be levied on all fabric imports.

The duty will equal charges paid to the government by domestic manufacturers to engage in the textile business.

The Textile Ministry proposal is understood to have been approved by the Ministry of Finance. It is now before the Ministry of Law for final clearance.

Sources suggest pure cotton fabrics will be assessed a duty of 5 percent and polyester fabrics 25 percent.

As part of the U.S. and EU agreements, the government in February removed polyester staple fiber, cotton and woolen yarn from the so-called negative list of imports. It also eliminated some curbs on imports such as fabrics, partially assembled goods and garments.

But fabrics, partially assembled goods and garments are still allowed only with special import licenses granted to large exporters, a means of indirectly restricting imports.

The licenses are given for amounts ranging between 4 percent and 5 percent of export earnings, and can be used to import goods from a specified list. The licenses can be sold to others, at a premium of 15 percent of the value of the license.

The total value of licenses likely to be issued in fiscal 1996 through next March 31 is projected at 10 billion rupees ($322.5 million). The bulk of this won't be for textile imports, but such products as cars and electronic consumer goods.