Monday, February 17, 2014: India has various Trade Agreements with several countries. These include Comprehensive Economic Cooperation Agreements (CECA), Free Trade Agreements (FTAs), Preferential Trade Agreements (PTAs). Some of the countries with whom India has preferential trade agreements include Korea, Japan, and the ASEAN countries including Thailand, Malaysia, Singapore among others. These countries are important exporters of electronics goods.
As per agreement with Thailand, the Government of the originating country is required to issue a Certificate of Origin after satisfying itself that the goods satisfy the conditions specified in the said agreement. This requires that the goods claiming Certificate of Origin should have local value addition of at least 40 percent.
Most electronics items are already under zero duty regime, due to signing of Information Technology Agreement (ITA). Some items which are not on zero import duty under the ITA are under the category of consumer electronics. Consumer electronics includes TVs, Cameras, other entertainment electronics etc. India has an import duty of 10 percent on these products. However, under the preferential trade agreements, it has been agreed that most of these would also be brought to zero duty. It is relevant to mention that countries like Malaysia and Thailand are significant exporters of consumer electronics to India.
It has now been reported that there is misuse of trade agreement in the import of Flat Panel TVs from Thailand. According to said report, the TVs being imported from Thailand into India by several major TV companies do not meet the value addition norm agreed to upon under the Trade Agreement. By wrongly declaring a higher value addition, the manufacturers are able to import TVs into India at zero customs duty as against 10 percent import duty levied on import of flat panel TVs. It may be noted that India is one of the fastest growing markets for flat panel TVs in the world.
Frost & Sullivan research estimates that the Flat panel TVs market in India was valued at USD 3.55 billion in 2012 and is likely to grow at a compound annual growth rate of 21.7 percent by 2015. The total market (TM, total consumption) for Flat panel TV in India in 2012 was 6.48 million units and the total domestic manufacturing (TDM, representing local production) was 1.93 Mn units for the same year.
Apart from the specific issue of misuse of the provisions of Country of Origin requirements of FTA for flat panel TVs, Board of Customs and Director General of Foreign Trade have been requested to issue necessary instructions to their field formations to ensure that Country of Origin requirements are met when importers invoke the FTA benefits for importing electronic goods. Readers are welcome to bring to our notice instance of such misuse so that these could be shared with concerned authorities for further necessary action.
