Steep Imports from China and Adverse Effects of SAFTA on MSME

Ludhiana, August 14, 2013: FASII’s National President Badish Jindal met S.R. Rao, Secretary, Govt. of India, Department of Commerce and submitted a representation today.
Jindal detailed how the imbalanced trade with China and SAFTA countries had hit the micro and small enterprises in the country particularly the said enterprises in the bicycle industry.
Also, Jindal, at the meeting,  described how the government helped the textile industry through “TUF” and sought a similar scheme should be introduced for the Bicycle and Parts Industry.  Rao agreed to consider the request of Jindal.
The Commerce Secretary also acceded to the request of FASII to forward the communication submitted by FASII to the Finance Ministry to decide matters related to increasing import duty on bicycle and parts, effecting antidumping duty, fixing floor price etc.
The representation reads;
“1.    We may kindly be excused for intruding into your very valuable time.  The imports from China has shot up from  Rs.265 lakh crores  to Rs.295 lakh in the year 2011-12 to 2012-13 crore with an increase of 11.37%. The imports are mainly finished goods.  And the exports from India to China dipped down from  Rs.87 lakh crore  to Rs.73 lakh crore during the same period with a decrease of 16.14%.  The exports are mainly raw-materials.  
2.    We may point out that the items reserved for manufacture in the Micro and Small Enterprises sector and the items reserved for procurement from the said sector are freely flowing into Indian markets.  This imbalanced trade has forced many micro and small enterprises in the country to down their shutters.  
3.    Moreover, all the Commodities, mainly, items of Micro & Small Enterprises(MSE) have started coming through imports from Bangladesh and Sri Lanka under SAFTA.  Majority of these items are Chinese-made but have the trade-mark of Bangladesh and Sri Lanka. This trend has terribly hit the domestic Micro and Small Enterprises.   
4.    Also, China and other countries are dumping bicycle parts in India.  The Union Government in the last budget gave a very good support to this sector  in the year 2012-13 by increasing the import duty on bicycle parts at the rate of 20% and on complete bicycle at 30%.
5.    However, now these countries are sending materials at under-invoice which results in extreme loss to the industry as well as to the government. It is, therefore, earnestly requested that the floor price on imported  Bicycle or parts should be fixed at more than Rs.150/- per KG. This will arrest cheap imports and save the industry from their dire straits.(Note: the price of bicycle in India stands at Rs.3000 to Rs.4000 - as per the procurement rate of State Governments - and the average weight of bicycle is 15 to 20 KG. So the average price of the bicycle comes to Rs.150/- per KG)
6.    The Research Studies Report of July 2012 of the Deptt. Of Industrial Policy and Promotion clearly states that the bicycle industry is facing a rough weather owing to the cheap imports from China. As per the data of this Report, 95.06% of the bicycle and 94.03% of the bicycle parts are imported from China.
7.    Even the large scale bicycle manufacturers have started importing these products from China which is affecting the bicycle parts industries in the Micro and Small Enterprises sector.
 
8.    All the large scale bicycle manufacturers supplying the bicycles to the school-going children under various Central Government schemes implemented by the State Governments are using Chinese parts which is detrimental for use by the school going children.
9.    To save the domestic industries, the European Union imposes 48.5% import duty on the bicycle and bicycle parts industries.
10.  In the circumstances, we are losing our exports of bicycle and bicycle parts by Rs.1044 crores in 2008-09 to Rs.670 crores in 2012-13.  Whereas in the same period our imports have surged from Rs.850 crores to Rs.3100 crores during the same period.
11.  The process of implementing anti dumping duty is a very tedious and protracting .  Most of the affected bicycle and parts manufacturers are in the Micro and Small Enterprises sector.  These manufacturers are unable to follow the procedures of the antidumping duty.  Whereas the large scale manufacturers have started importing bicycles which badly affects the Micro and Small Enterprises sector.
12.  It is therefore earnestly requested that the floor price of import of bicycle and parts may be fixed at Rs.150 per kilo.  Or, the antidumping duty should be imposed on the Chinese imports like European Union.
13.  Imports of the products reserved for exclusive manufacture and procurement from the Micro and Small Enterprises sector should be totally banned.
14.  It is pertinent to mention here that no imports of bicycle & parts came from Bangladesh and Srilanka prior to SAFTA.  However, there is a sudden spurt in the imports of these products from the said countries after SAFTA which may kindly be looked into.
15.  The bicycle & parts industry in India is at present having outdated technology.  The Government helped the Textile Industry through “TUF”.  We suggest that the same be introduced in respect of the Bicycle and Parts Industry.”