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Doha negotiations may script QR return

The imposition of QRs on certain products is unlikely to flout WTO norms as it would be on a temporary basis.

Mar 28, 2007, 01.45 AM IST

NEW DELHI: The government is amending the Foreign Trade (Development & Regulation) Act, 1992, to arm itself with powers to impose quantitative restrictions (QR) on imports to protect the domestic industry.

The move comes as a major relief to India Inc as QRs can now be imposed under the proposed provision even if there is no dumping. As of now, the Indian law has a provision to impose a safeguard duty on such imports and there is no scope for imposing QRs to protect the domestic industry even when goods are not being dumped.

The proposed amendments to the Foreign Trade Act would also make registration mandatory for importers and exporters of services. This means that major players from industries such as hospitality, healthcare and tourism - who earn foreign exchange by providing services to foreigners here - would have to
register with the government.

India, as per its commitments at the Uruguay Round of the WTO, had started removing QRs in a phased manner since April 1996 and finished the process by March 31, 2001. However, with India readying itself for committing to lower tariffs on both agriculture and industrial products in the ongoing Doha negotiations of the WTO, the government has felt the need to equip itself with the power to impose QRs if required. India believes that the imposition of QRs on certain products purely as a safeguard measure is unlikely to flout WTO norms as it would be on a temporary basis till the import surge is controlled.

According to official sources, the government also plans to regulate export of goods, services and technology
related to dual-use items in line with the weapons of mass destruction (WMD) Act, 2005. This is being done to take care of international concerns over nuclear programmes of countries such as Iran and North Korea. It is also significant for early conclusion of the proposed civil nuclear cooperation with the US.

The mandatory registration for services - to be done on the lines of importer-exporter code (IEC) for those dealing in goods - would initially cover those availing benefits under the Foreign Trade Policy. In other words, service exporters benefiting from the Export Promotion Capital Goods (EPCG) schemes would be covered.

The sources said services are being brought under the Foreign Trade Act for the first time. In view of the overall policy of deregulation, industry associations such as the Federation of Indian Export Organisations (FIEO) are resisting the move. However, the government is keen to go ahead with the amendment.

It is understood that the proposed amendments would be tabled in Parliament soon and officials expect a smooth passage since the changes are not politically sensitive. In fact, a standing committee that went through the amendments has suggested that adequate provisions should be legislated to protect the domestic industry from surge in imports.

In the past, the government has been tackling import spurts through anti-dumping investigations or, in a few cases, imposition of safeguard duty, but a comprehensive mechanism is expected to be put in place now for enabling imposition of QRs when imports hurt the domestic industry without actually dumping.
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