The process of mandatory registration of import contracts for several copper and aluminium items under the ‘Non-ferrous metal import monitoring system’ has kicked-in from April 5. This move is sure to help more rational intervention decisions by policy-makers, whenever needed.
This follows a similar move in September 2019 when steel products import was brought under steel import monitoring system. Later it was extended to coal. Steel importers had protested when compulsory registration of contract was introduced (see BL Commentary September 13, 2019), but have now fallen in line.
Prior registration of import contract is sure to raise the hackles of copper and aluminium importers. But it is a necessary move that will allow the government to know impending imports in advance and monitor their arrivals. Advance information relating to the quantity contracted for, price, arrival time and so on will help New Delhi take timely decisions. In case of steel import, the government had also raised the suspicion of invoice manipulation.
Till now, New Delhi has had no clue as to the quantum of copper and aluminium items sought to be imported, their price, likely arrival time and so on. In the absence of this key information, New Delhi’s response to market conditions was often knee-jerk.
Prior registration of import contract will give the government adequate time to assess the emerging import situation and help undertake appropriate policy intervention.
It is clear New Delhi wants to closely monitor and in some sense regulate high value commodity imports. There is a serious concern over widening trade deficit and rising instances of speculative imports.
From a net exporter of copper, India has become a net importer since 2018-19. In 2019-20, India imported 115,000 tonnes of the red metal. A major reason for this is the closure of the Tuticorin Sterlite Copper plant since May 2018.
Vegoils on the radar
The next major commodity likely to be brought under import monitoring system is vegetable oils. The country imports unfettered quantities of various edible oils (palm, soya, sun and so on) and often, imports are excessive and speculative in nature. Such unfettered imports depress domestic oilseed prices and discourage growers. We spend over $10 billion (about ₹75,000 crore) annually to import 13-14 million tonnes.
Like in case of copper and aluminium items, the government has no clue about quantities of various vegetable oils contracted for, type of oil, price, period of arrival and so on. There is also the case of import for speculative purpose or mere stock transfer from origin to India.
Import monitoring (through advance registration of import contract) will enable the government to vary the rates of customs duty and cess from time to time in a more judicious manner. This is sure to give a boost the government’s idea of Atmanirbhar Bharat (self-reliant India).
The author is a policy commentator and commodities market specialist. Views are personal