The Hindu : Tamil Nadu / Salem News : Higher import duty for sago, starch sought

Online edition of India's National Newspaper
Wednesday, Apr 13, 2005

Tamil Nadu

Tamil Nadu - Salem

Higher import duty for sago, starch sought

By Our Staff Reporter

SALEM, APRIL 12. The starch and sago manufacturers in the district have urged the Union Government to increase the customs duty for imported tapioca starch and sago to save the domestic industry.

This cry comes when the manufacturers have won the case pleading to impose safeguard duty on the imported starch during the hearing at the Office of Director-General of Safeguard recently. The associations of starch and sage manufacturers and tapioca growers with the help of SAGOSERVE, an industrial co-operative society based at Salem, approached the Union Ministry of Finance seeking an increase in customs duty on imported starch and sago a year ago and the Ministry directed its Director-General (Safeguards) to conduct an `investigation'.

The Director-General of Safeguard has accepted the injury caused by the imports in the case of starch and recommended the levy of safeguard duty of 33 per cent in the first year, 23 per cent in the second year and 13 per cent in the third year, allowing the domestic industry to reorganise itself to face global competition. This recommendation in favour of the domestic manufacturers has also been referred to the Union Cabinet, which is yet to take a decision.

Difficulties feared

Many fear that imposing safeguard duty may invite difficulties. The importers may go on an appeal to the World Trade Organisation (WTO) against it and the government may have to compensate other countries, which are affected by the move. "In that case, we cannot afford to argue the case at WTO as we are the small-scale industry and going sick. Instead, the government can increase the customs duty on the import right away. The tariff rates of customs duty for both starch and sago are 50 per cent. The effective rates for both commodities are 30 per cent. The bound rates of the WTO are pegged at 100 per cent and 150 per cent respectively, which are well above the tariff rates and effective rates. Hence, the government can double the tariff and effective rates rather than going in for imposing safeguard duty," says T.R. Palanivel, Secretary of the Federation of Sago and Starch Industries Association.

The question of levying safeguard duty arises only when the tariff rates and effective rates of customs duty are already at or near the bound level, and it is proposed to increase the total duty on imports beyond the bound level.

"The ministry may have thought that the manufacturers and tapioca growers' should justify their demand on increasing customs duty and directed a safeguard investigation. We have won the case to our favour. The government can now decide whether to impose safeguard or increase customs duty. We have proved genuineness that we are affected due to imports," says R. Sivakumar, Joint secretary of the association.

The Salem Starch and Sago industry has began falling slowly due to heavy imports since 2000-01. About 300 factories have already been closed. Only about 450 are functioning. If the remaining starch manufacturing units are closed, the livelihood of over four lakh tapioca growers, including one lakh tribals, may become a question.

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