In a move to protect domestic producers of single mode optical fibre, used in telecommunications operations, against competition from cheap imports from China and some other countries, India may soon impose a 10 per cent safeguard duty over and above the basic customs duty on the item.
The Directorate General of Trade Remedies (DGTR) under the Commerce Ministry, in its final findings notified recently, proposed a 10 per cent safeguard duty on imports from all developed countries and China for a period of one year. Increased imports of the item were causing or threatening to cause injury to domestic producers of like or directly competitive products, it observed.
“The existing circumstances justify the imposition of a safeguard duty in order to protect the domestic industry from further serious injury, which may be difficult to repair,” the DGTR noted. The safeguard duties will be implemented once the Finance Ministry notifies them.
The World Trade Organisation allows imposition of safeguard duties if a surge in import of the item under consideration and the resulting injury to the domestic players can be conclusively proved.
The DGTR carried out the safeguard investigation following complaints from Sterlite Technologies and Birla Furukawa Fibre Optics that they were unable to compete with imports and regain their market share.
While bulk of cheap imports of single mode optical fibre into India is from China, Japan, Indonesia, Brazil and Taiwan too export to India. However, the DGTR has exempted all developing countries, apart from China, from the proposed duty as their imports do not exceed 3 per cent individually and 9 per cent collectively.
The DGTR noted that since the basic customs duty on single mode optical fibre was increased by 5 per cent last year, imports had somewhat reduced and a 10 per cent safeguard duty had been calculated considering all circumstances and the extent of injury.
Relative to domestic production, imports of the item have consistently increased in in the period 2016-17 to January-June 2019 and have more than tripled from the base year. Share of imports (excluding domestic industry imports) in Indian demand has also increased by five times in2018- l9 as compared to 2016-17 and has continued to increase since, the findings pointed out.
The main reasons for increased imports include global overcapacity caused by delay in announced 5G roll out plans and slow paced digitisation along with significant decline in Chinese demand, which consumes more than 50 per cent of global production of the item.
The reason for increased inflow from China has been attributed to various non-regulatory/non-fiscal barriers imposed by telecom operators in most of the Western countries on entry of Chinese fibre.