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Safeguard duty investigation to save sago industry

By R. Ilangovan

SALEM, NOV. 20. The Union Ministry of Finance has asked the Director-General (Safeguards) of Customs and Central Excise to initiate a ``safeguard (duty) investigation,'' into liberal imports of starch, modified starches, cassava and tapioca, particularly from Thailand.

Accordingly, the Safeguards' Director-General (DG) is holding a public hearing with persons connected with the industry in New Delhi on December 6. The increasing import of sago products after the WTO (World Trade Organisation) agreement, has injured the domestic industry. Liberal imports have hit the economies of Kerala, a leading tapioca cultivator, and Tamil Nadu, a major processor.

Alarmed at the dumping of cheaper products from Thailand, farmers and industrialists approached the Government, which after deliberations increased the import duty from 30 to 50 per cent.

But farmers feel that deterrent measures alone can save the industry. They want a duty, above the WTO bound rate, imposed and a total ban on imports from Thailand clamped.

The industry has suffered since January 2004, when the duty on modified starch was reduced from 30 to 20 per cent. The imports received a further fillip when a special additional duty of 4 per cent was withdrawn. As a result, consumers have started importing starch and sago products from Thailand.

``Steep increases in the price of farm inputs and power tariff and reluctance among industrialists to upgrade technology have worsened the situation for the domestic industry,'' says the Tapioca Growers Association president, Attur, S. Govindarajan.

The sale price of starch fell by 22 per cent a tonne within a year. The production has also fallen along with shrinking acreage. The area in Tamil Nadu, which was 1.04 lakh hectares in 2000-2001, declined to 67,951 hectares in 2002-2003 and 65,927 hectares in 2003-2004.

A minimum of 20,000 tonnes of starch and modified starch has been imported in the past 18 months. According to a recent report from the Food and Agriculture Organisation (FAO), European nations, major buyers of Thailand starch, slashed their import from 5.5 million tonnes in 1994 to 2.5 million tonnes in 2004. Hence Thailand has started diverting its bulk products to Indian market at a reduced price.

About 5 lakh farmers and farm labourers are facing an uncertain future in the districts of Salem, Namakkal, Erode, Dharmapuri, Tiruchi, Villupuram, Tiruvannamalai and Perambalur.

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