INDIAN industry on Tuesday asked the government to impose a 35% anti-dumping duty on capital goods imported from China, arguing that the measure was necessary to offset the indirect subsidy that Beijing offers to its industry by way of a fixed exchange rate.
A delegation comprising L&T chairman A M Naik, Society of Indian Automobile Manufacturers director general Dilip Chenoy and Tata Motors Managing Director Ravi Kant, called on finance minister P Chidambaram and demanded that such a measure was necessary to counter the slowdown in India’s industrial production.
They contended that the domestic industry was hit by the appreciation of the rupee and has also seen its cost competitiveness eroding due to the fixed rate of exchange for the Chinese currency against the dollar. Industry representatives argued that this fixed rate of exchange translated into an indirect subsidy of around 30%
to manufacturers in China. The delegation also sought easy financing for automobiles and making special additional duty on imported cars non-modvatable to protect the local industry.
The meeting comes in the backdrop of the industry growing by just 5.3% in January this year compared to 11.6% last January. The growth rate for the first ten months of the fiscal year—April 2007 to January 2008—was down to 8.7% compared to the 11.2% registered in the same period in 2006-07.
What is especially alarming is the fact that the capital goods sector — which makes equipment that other sectors use — grew by only 2.1% in January over January last year after averaging a more than 20% growth between April and December.
Consumer durables which constitutes the automobile sector registered a decline in output in January this year compared to the same month in 2007. With a negative rate of 3.1% for the month, this sector seems to be going through a really bad slump. The ten-month growth rate for consumer durables is also minus 1.7%.