Extra conditions for metal scrap import

Publication: Business Standard, Mumbai, October 17, 2016

TNC Rajagopalan
The Director General of Foreign Trade (DGFT) has restricted the import of unshredded
metallic scrap through only designated ports, having radiation portal monitors and container
scanners, and the consignment is so examined in line with Customs protocol. However, any
Inland Container Depot (ICD) can handle clearance of unshredded metallic scrap, provided
this passes through any of the designated sea ports or any new ports to be notified from
time to time.
The present policy is to allow import of any form of metallic waste or scrap, as long as it
doesn't contain any hazardous material, toxic waste, radioactive contaminated waste or
scrap containing radioactive material, any type of arms, ammunition, mines, shells, live or
used cartridges or any other explosive material in any form. The importer has to show a
copy of the contract with the exporter which stipulates compliance to this effect.
Also, a Pre-shipment Inspection Certificate from the authorised agencies must be presented,
that the consignment does not contain any of these items mentioned earlier and that it was
checked for radiation levels and contains none in excess of the natural background. The
certificate must give the value of the background radiation level at that place and the level
on the scrap.
In the case of waste or scrap of certain metals (brass, copper, iron, nickel, tin, aluminium,
zinc, magnesium, steel) coming under specified entries in the ITC (HS) classification, import
is permitted in shredded form through all ports without any license. Such freely importable
processed metallic scrap i.e. in shredded, cut sheared, rotor sheared, briquetted, baled,
bundles, turnings, borings, granule or nodule form is allowed against the presentation of a
bank guarantee of Rs 10 lakh by the importer. Also subject to a Pre-shipment Inspection
Certificate from the authorised agencies regarding the radiation levels, etc. The
consignment so imported at the designated ports has to compulsorily pass through the
scanner or radiological detection equipment installed at these ports before being cleared by
the Customs, even if the containers are destined for an ICD.
Import of such waste or scrap in unshredded form, meeting international standards for such
classification, was permitted only through 14 specified ports and 12 specified ICDs. This
condition now stands modified. Henceforth, any sea port to be designated for import of
unshredded metallic scrap will be required to install radiation portal monitors and container
scanner with adequate security. Any port having done so must approach the jurisdictional
Customs for inspection and certification. The latter may grant this on receipt of certification
from the Atomic Energy Regulatory Board. On the Cusotms clearance, DGFT will notify such
a port as a designated one for import of unshredded scrap.
The presently designated sea ports - Chennai, Cochin, Ennore, JNPT (Navi Mumbai), Kandla,
Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin, Visakhapatnam, Pipavav, Mundra
and Kolkata - will be allowed to import unshredded scrap till end-March 2017. By which time
they must install and operationalise radiation portal monitors and container scanner. Ports
failing to meet the deadline will be derecognised for the purpose of import of unshredded
metallic scrap from April 1.
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Help local industries support economic growth: AIMO

Publication: Business Line, Mumbai, October 17, 2016
Chennai, October 16: The Centre should ensure at least 50 per cent of every Ministrys
growth plans in its sector should be met through domestic industries, according to the AllIndia Manufacturers Organisation.
In an open letter to the Commerce Ministry, KE Raghunathan, National President, AIMO, the
apex body of Indian Chamber of Industries, said targets need to be set under the Make in
India scheme with local industries contributing to the growth and dumping of goods and
services stopped.
Every Ministry has charted out growth plans but these need to be coordinated with the
Commerce Ministry.
AIMO is concerned about the increasing trade deficit of $52.68 billion in 2014-15 with
China.
To quote one example, AIMO points out that the Power Ministry has an ambitious target of
100 GW from capacity in solar energy by 2021-22 but this will only add to the trade deficit.
Even last year nearly 70 per cent of the solar modules were imported from China. If this
100 GW becomes a reality in five years, at current rate of imports, over $ 42 billion modules
will be imported and most of this from China and Customs duty-free.
No steps have been taken by Commerce Ministry to control this.
These solar modules will occupy 65,000 acres of roof area and 210,000 acres of ground
area. Waste disposal will be a challenge in case these modules fail in a few years due to
poor quality.
This is the impact of just one Ministry with just China alone. If we take into account all other
Ministries with such growth plans in their projection what will happen to this trade deficit,
asked AIMO in the letter. The manufacturers organisation urged the Centre to consult trade
bodies and manufacturers organisations and take action in this regard.
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GST can reduce transportation cost by 20-30 per cent

Publication: Business Line, Mumbai, October 17, 2016
Manufacturers can streamline procurement and establish a lean supplier network
Border-less transport can create a far leaner and efficient distribution network. GST will
transform upstream, midstream and downstream points of the supply chain, says Rajeev
Singh, Partner Management Consulting, KPMG Advisory Services.
How do you see business-to-business (B2B) and business-to-consumer (B2C)
segments getting reshaped after GST?
The B2B segment focuses predominantly on upstream to generate cost efficiency. Presently,
even if a supplier across the State supplies goods at 1.5 per cent lower cost, the suppliers
landed cost does not work out to be as cost effective if one considers the additional 2 per
cent central sales tax (CST). Earlier, the manufacturer tried as much as possible to buy
material from the same State. But after GST, the manufacturer can streamline his
procurement footprint and establish a lean supplier network that is cost-effective,
irrespective of the location.
In case of B2C, the focus is largely on downstream. Overall, the supplier network will get
leaner both in buying as well as on the distribution side. Manufacturers will prefer larger
plants because of a reduction in logistics cost and ability to service greater geographical
area from the same plant. So, for instance, today if I have a plant with a very bulky
transportation network, the break-even distance could be around 250 km. But after GST the
break-even distance will increase possibly to 300 km or more. People will set up larger
plants and this will result in economies of scale for the manufacturer. Over a period of one
or two years, the benefits will pass on to the consumer. Across the world, GST, though
inflationary from a short-term perspective, has brought down cost over a longer term.
What is your take on increasing levels of containerisation after GST?
Usage of twenty, thirty and forty tonners will go up after GST. Consolidation will increase
and demand for transportation using larger load trucks will be high. But this will have to be
dovetailed well with infrastructure development because with bigger trucks you require
better and broader roads. This infrastructure investment should be done by the Centre.
From an industry perspective it is good news because per km transportation cost will go
down.
How do you see the cold supply chain market evolving after GST?
It is very similar to others. There are three types of supply chain: the ambient supply chain,
chain that moves at 4 degrees centigrade and chain that moves at -20 degrees centigrade.
In terms of consolidation, it will be a little bit more beneficial for a cold chain because the
investment requirement in an ambient supply chain or a 4 degrees centigrade supply chain
is lesser than in a cold chain. Rather than consolidation that is happening currently at 100odd locations, after GST, investments can be made only in 60-70 locations.
After GST, will there be any change in the service levels for customers?
Service levels will improve as the depot and dealers get remapped. Customers can reap
benefits from both cost and service levels. With GST, service levels will go up while cost will
go down.

What will be the effect of GST in the creation of new jobs?

From a micro perspective, at every level there is an opportunity to rationalise and reduce
the people involved. Even from a tax perspective, the number of authorities dealing with tax
is getting simplified. So, overall, at a company level, greater efficiency is obtained with
fewer number of people than in the earlier system. But in the overall perspective, Indian
companies will become globally competitive. This should help improve growth of industry in
India.
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Electronic Products Policy Will Now Focus on Exports

Publication: The Economic Times, Mumbai, October 17, 2016
Yogima Seth Sharma & Surabhi Agarwal
New Delhi: NITI Aayog junks draft policy stressing on local manufacturing of
electronics and floats paper favouring an export-related plan for developing
coastal economic zones
NITI Aayog, the government's premier think tank, has junked its first dedicated `Make in
India Strategy for Electronic Products' and has floated another policy that is more exportoriented and favours developing coastal economic zones.
The previous policy paper had faced opposition from the Ministry of Electronics &
Information Technology as well as reservations from other stakeholders mainly because of
its domestic focus and its emphasis on semiconductors.
They had floated a policy paper once that never went forward since many people had
reservations on it, a senior ministry official told ET on condition of anonymity. The official
added that the ministry is, however, fully supportive of the second draft paper submitted by
the think tank.
They are talking of port-based electronic manufacturing clusters. They seem to have
discussed it with the industry and then floated the paper. It's a good paper, which nicely
analyses the prospects. We are fully supportive of it. However, it is still a poli cy paper and
may take some time to take shape, the official said.The idea is to promote greater exports
of electronics and drive larger investments. We have achieved a certain level in terms of
manufacturing so far and this will take it to the next level.
India's domestic consumption of electronics hardware was $63.6 billion in 2014-15, with im
ports accounting for 58% of the total. NITI Aayog had initially come out with a draft policy
that sought to attract global electronic manufacturers to set up units in India and give a
push to Prime Minister Narendra Modi's pet project, Make in India. The draft policy
suggested a 10-year tax holiday for companies investing over $1 billion in electronics ma
nufacturing or creating 20,000 jobs in India.

It has now been shelved in favour of the proposal to set up coastal economic zones for
labour-intensive sectors in the country, much along the lines of China, to enable
manufacturers to tap overseas markets without much difficulty.
We are not pursuing the electronics policy as the Aayog is pushing for comprehensive
coastal economic zones, which would serve the purpose and would be a better option,
Aayog vice chairman Arvind Panagariya told ET.
Besides, the think tank was of the view that the sector needed an export-oriented strategy
to cater to the global market, which exceeds $2 trillion.
NITI suggested that the country needs to forge free-trade agreements to create duty-free
markets for electronic goods. It had said India's current approach with respect to such
agreements is defensive because it is a bigger importer of electronic products than an
exporter.
An industry official said the policy paper could not fructify since it talked about investments
from semiconductor companies, something that appears impossible to pursue at the
moment.
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