India: Thailand gold may hit anti-dumping wall

21/02/2013 12:00 - 449 Views

NEW DELHI: The government is considering imposing anti-dumping measures, usually associated with low-value commodities, on import of gold jewellery from Thailand as part of several remedial options being considered to battle a problem that has been giving policymakers a headache in recent months.

Rising gold imports, a lot of it from Thailand because of the low Customs duties payable on imports from that country, have been cited as the biggest contributor to India's worsening external sector numbers, notably the current account deficit that vaulted to 5.4% of GDP in the September quarter. This number, which is even higher than what it was at the height of the balance of payments crisis in 1991, has got policymakers and ratings agencies ring alarm bells and contributed to the pressure on the rupee.

Officials in the commerce and industry ministry said they were examining a range of so-called remedial measures to check the "dumping" of gold jewellery imports from Thailand, and that New Delhi would soon write to Thailand, giving it 90 days to respond under a bilateral trade pact between the two countries called the Early Harvest Scheme.

"We are assessing the dumping of gold jewellery from Thailand. We will look into the remedial measures that can be imposed as per the Early Harvest Scheme with Thailand," one official told ET. The Early Harvest Scheme, signed in 2004 and covering 82 items, provides for a host of remedial measures, which include anti-dumping duties, safeguard duties and even suspension of imports in extreme cases if there is a serious injury to domestic industry or in case of rampant misuse of the treaty terms.

Authorities Fear Misuse of Pact

These remedial measures can be invoked only if there is evidence that such imports have had a negative impact on the domestic market or if the trading partner has used unfair means. Ajay Sahai, director-general and CEO of the Federation of Indian Exports Organisation (FIEO), said establishing a case of dumping will be difficult and the government should rather ensure stricter enforcement of Rules of Origin. "Most of the jewellery coming from Thailand is of Chinese and Malaysian origin," noting that the price of gold in both India and Thailand were on a par.

Gold jewellery can be imported from Thailand at a concessional duty of 1% under the bilateral treaty. Gold imports from other countries attract 10% duty.

The Customs duty was raised to temper imports of the yellow metal after it accounted for nearly half the country's import bill in the previous fiscal. India cannot impose additional Customs duty on gold jewellery imports under the Early Harvest Scheme with Thailand, although it is planning to bring up the issue in the free trade agreement negotiations. Gold jewellery imports from Thailand, which jumped manifold after duties were raised on other trade routes, have been under the scanner of India's intelligence agencies. They feel the Indo-Thailand trade agreement is being misused to route gold jewellery from third countries.

20 Feb, 2013, 01.43 AM IST

Source: economictimes.indiatimes.com