Mounting pressure from the Indian government has forced Egypt to call off the ‘precautionary fee’ of 25 percent of CIF value imposed in January this year on Indian cotton yarn, fabric and sugar. This tariff was in addition to 5 percent import duty on cotton and mixed yarn and 10 percent import duty on cotton and mixed woven fabrics.
Turkey has also imposed similar duties on Indian goods during the same period. Indian governmental agencies involved in the exercise of getting the tariff rolled back appeared confident as Egypt’s decision was likely to prompt Turkey to follow the same steps to avoid any confrontation with India in this regard.
Ever since Egypt and Turkey imposed these additional duties, India had taken up the cause to both governments to have a relook at the issue and warned that they would challenge this at the WTO. The imposition of such tariffs is in direct violation to the WTO rules unless it proved that the imports are causing serious damage to its domestic industry.
Egypt’s move is likely to act as a disincentive to other countries that are planning to slap such duties on Indian goods. However, The Confederation of Indian Textile Industry (CITI) said the tariff roll back would have only marginal impact on the exports since the global economy had not recovered yet.
The tariff imposed by Egypt in January on Indian goods was for a period of one year which included half a dollar on every kilogramme of cotton textile, and every kilogramme of processed sugar attracted $1. India is the largest exporter of cotton yarn to Egypt and the exports stood at about $115mn in 2007-08 fiscal. The two-way overall trade during the same period between both countries was about $3.5bn.
Indian exports have recorded a negative growth for the past five months, and the country is leaving no stone unturned to get them back on track. According to the Ministry of Commerce of India the talks are progressing to get a similar decision from the Turkish government.