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Amendment to  Customs Act

  Jun 27, 2020

Amendment to  Customs Act

What is the Act?

The Customs Act1962 is the basic statute which governs entry or exit of different categories of vessels, aircrafts, goods, passengers , etc., into or outside the country.

So far, the government had powers to only ban imports and exports of gold and silver under the Customs Act, 1962.

What is the amendment proposal?

It is proposed to amend the Customs Act,1962 to give it wide powers to ban imports and exports of goods that may hurt the local economy. For example,  to bar imports of cheap toys and firecrackers from China.

This power will be exercised only in exceptional circumstances.

The government also proposes to amend the Customs Tariff Act of 1975 to strengthen the mechanism to prevent dumping of cheap goods in the domestic market that empowers the Central government to apply safeguard measures, in case any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry.

Why Amendment is proposed?

1) China is global hub of manufacturing and with its highly state sponsored subsidised good and its practice of dumping, India is facing highest trade deficit with china ( around $57 billion). The measures are aimed at narrowing the trade deficit with China, which has flooded the Indian market with items such as toys, firecrackers and solar power equipment.

2) There is a global rise in protectionist policies and it is necessary to shield home-grown companies amid slowing economic growth.

3)  The new powers may provide a lever to the government to foster consumption of local products and boost manufacturing.

What are the earlier steps taken to deal with above problems?

  1.  India had merged two separate bodies handling anti-dumping and import safeguards to form the Directorate General of Trade Remedies, similar to the US International Trade Commission, to create a trade defence mechanism that can respond to developments in a comprehensive and timely manner.
  2. The government has initiated more than 130 anti-dumping/countervailing duty/safeguard cases to deal with rising incidence of unfair trade practices.
  3. The Recent Union budget also approved an enabling mechanism to raise tariffs on imports of green energy equipment such as solar cells and modules.