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Easing of import restrictions unlikely to hit local producers

India's easing of import restrictions on 715 items is unlikely to affect local producers immediately as they would still be protected by high import duties and quality control norms, analysts said.

"I don't see any flood of imports of farm products...though there may be some initial enthusiasm to experiment with foreign food items," a Bombay-based commodity analyst said.

Despite the removal of quantitative restrictions (QRs) on imports of agricultural items, there are enough safeguards like import duty and quality checks to protect domestic industry, he said.

India on Saturday lifted QRs on 715 products including grains, animal products, oils, textiles, watches and automobile in compliance with a World Trade Organisation (WTO) ruling.

Of the 715 items, 82 are agricultural products, 40 are animal products, 331 are textile items and 24 are beverages, spirits and tobacco related goods.

"There will be nil imports of grains even after the removal of QRs as customs duties are quite high which make imports commercially unviable," a senior official of an international grains trading firm said.

Import duties on wheat and rice are 80 to 100 per cent while it is 66 per cent on maize, traders said.

Other restrictions like imports through state agencies and mandatory quality checks would also affect imports of grains especially wheat and rice, he said.

Imports of food products and meat and meat items are subject to stringent quality checks.

"This tool can also be used to control imports," one analyst said.

India's textile industry too would not face any immediate competition from imports though they were at a risk in the long-term unless their costs were lowered, an industry official said.

"I think there will not be any problem in the near term as foreign textiles companies would take some time to set up their distribution network in the country," said Siddhartha Rajagopal, executive director of Cotton Textiles Exports Promotion Council.

But it would become difficult for domestic textile firms to compete in the free trade regime if cost of power and interest rates were not reduced to international levels, he said.

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