Govt may impose restrictions on used capital goods import

The Department of Heavy Industry (DHI) has received several representations from all segments of the industry to impose restrictions on such imports, DHI Secretary S Sundareshan said.

"... necessary notification in this regard will be issued shortly," he said at a function organised jointly by CII and Indian Construction Equipment Manufacturers' Association (ICEMA), which also launched its new website and logo here.

Sundareshan, however, did not reveal further about the restrictions to be put in place. To restrict such imports, the National Manufacturing Competitiveness Council (NMCC) has also moved a proposal to the Department of Industrial Policy and Promotion.

Speaking on the occasion, NMCC Member Secretary Ajay Shankar said: "Besides anti-dumping duty, there is a provision of safeguard duty which is rarely used ... other provision is quality control order that could be used in some segments of the industry."

According to officials, the government is considering to stop giving benefits under the Export Promotion of Capital Goods (EPCG) scheme for importing used goods. Under the scheme, a domestic manufacturer can import
capital goods at only 3% customs duty, irrespective of the applicable duty rate.

In May this year, the Committee of Secretaries, headed by Cabinet Secretary Ajit Kumar Seth, had expressed serious concerns over the growing imports of used capital goods. Besides, a Parliamentary panel has suggested to the
government to consider imposition of duty on imports of capital goods in a bid to provide a level-playing field to domestic capital goods manufacturers vis-a-vis foreign players.

Capital goods imports are estimated to have crossed USD 40 billion at present. They were USD 6.5 billion in 2003-04. The capital goods output declined 7.7% in May as against a growth of 6.2% in the same month last year.

The construction, textiles and machine tool sectors are among those which import used machinery in large numbers.