Import of mobiles, cameras, electronic items from FTA partners under scanner

The Customs Department will closely watch import of items like mobile phones, home appliances, set top boxes, cameras and other electronic items with a new set of rules for checking abuse of India’s free trade deals kicking in from next Monday, said an official.

Import of these items from countries with which India has free trade agreements (FTAs) will receive special regulatory attention as the authorities enforce new rules for verifying the origin of imported products.

The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 issued last month takes effect from 21 September. The idea is to prevent dumping of products into India by exporters in a third country exploiting the free trade agreement India has with certain nations.

These rules were issued to check the alleged abuse of the FTAs, which has been on the rise to evade customs duty on imports. The official quoted above said that a new provision was introduced in the Customs Act earlier this year for strict verification of rules of origin of imports under FTAs to ensure that FTA benefits are taken correctly. The rules for implementing this provision were issued last month.

What has caused concern among the authorities is the fact that while India’s exports to FTA partner countries remain almost flat under major treaties, imports rose rapidly.

“Trade deficit has widened. In case of Association of South East Asian Nations (ASEAN) countries, the merchandise trade gap has risen from 5 billion dollar in 2010 when the ASEAN FTA was implemented, to more than 22 billion dollars now. This steep increase in trade deficit has become a serious cause of concern for the country,” the official said.

India’s position of merchandise trade surplus with Vietnam and Singapore has reversed in last three to four years. Also, trade gap has widened with Malaysia, Thailand, Indonesia and Singapore, said the official, who spoke on condition of anonymity.

“These FTAs have been misused widely to export goods to India in utter disregard to the rules of origin requirement. Vietnam has now been exporting a large number of electronic items. These include smartphones, television sets, set-top boxes, digital cameras and parts of mobile phones,” said the official.

Electronics imports have started coming in from Indonesia too. Thailand and Malaysia have also been exporting increased quantity of electronic and other goods, said the official.

In last five years, the Customs department has detected fraudulent claims under FTA to the tune of Rs. 1,200 crore, said the official.-Live Mint

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