'Measures to regulate import of used capital goods soon'

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Namrata Kath Hazarika | 09 Aug, 2012
In a bid to protect interest of the domestic capital goods sector, the government is mulling regulations to restrict imports of used capital goods, a senior official from the Department of Heavy Industry said Wednesday.

"We are hoping for such a decision (control on second-hand import of capital goods) which will prevent import of machinery manufactured beyond a particular date. We are expecting notifications to be issued shortly," said DHI Secretary, S Sundareshan on the sidelines of an event jointly organised by CII and Indian Construction Equipment Manufacturers' Association (ICEMA) in New Delhi.

He said that the DHI has received several representations requesting them to look into the matter and restrict such imports in to the country as it is hurting the domestic industry.

"Import of cheap second-hand equipment is affecting the domestic industry, particularly the capital goods sector. Therefore, the government has to see that the domestic industry -- where manufacturing is possible in the country -- is protected," he added.

Domestic players in the capital goods sector have been demanding such regulatory measures for a long time. The industry is for establishing a single port of entry for monitoring age of the equipment entering the country.

"We are not against second-hand equipment. What we are looking at is a regulation for the second-hand equipment," Chairman of the Indian Construction Equipment Manufacturers' Association (ICEMA), Glenville da Silva told SME Times.

"A lot of junks are coming into the country in the name of second-hand equipment," he said, adding, "We are getting 10 or 15 years old equipment which are completely discarded and these are coming in as second-hand equipment."

Today, while we have emission and safety norms in the country for new equipment, it is equally important that these (second-hand equipment) adhere to some safety norms, Silva pointed out.

Commenting on the issue, Member Secretary of the National Manufacturing Competitiveness Council, Ajay Shankar said, "Besides anti-dumping duty, there is a provision of safeguard duty which is rarely used . . . other provision is quality control order that could be used in some segments of the industry."

He pointed out that the government is also considering to withdraw benefits given under the Export Promotion of Capital Goods (EPCG) scheme for importing second-hand goods. At present EPCG scheme provides a domestic manufacturer to import capital goods at only 3 percent customs duty, irrespective of the applicable duty rate.

According to estimates, capital goods imports have crossed USD 40 billion at present. It was USD 6.5 billion in 2003-04.