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QUANTITATIVE RESTRICTIONS

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QUANTITATIVE RESTRICTIONS
By: Mr. M. GOVINDARAJAN
November 3, 2018
  • Contents

Meaning

Rule 2(1)(f) of Safeguard Measures (Quantitative Restrictions) Rules, 2012 defines the expression ‘quantity restriction’ as any specific limit on quantity of goods imposed as a safeguard measure under the Act.

Quantitative Restrictions

Section 9A has been inserted in the Foreign Trade (Development & Regulation) Act, 1992  (‘Act’ for short) vide Notification No. 2099(E), dated 19.08.2010.  This section gives powers to the Central Government to impose quantitative restrictions. 

Imposing restrictions

If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any goods are imported into India in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic industry, it may, by notification in the Official Gazette, impose such quantitative restrictions on the import of such goods as it may deem fit.

No such quantitative restrictions shall be imposed on any goods originating from a developing country so long as the share of imports of such goods from that country does not exceed 3%, or where such goods originate from more than one developing country, then, so long as the aggregate of the imports from all such countries taken together does not exceed 9%, of the total imports of such goods into India.

A developing country is a country notified by the Central Government in the Official Gazette, in this regard.

Period of effect

 The quantitative restrictions imposed shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such imposition.

If the central government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is necessary that the quantitative restriction should continue to be imposed to prevent such injury or threat and to facilitate the adjustments, it may extend the said period beyond 4 years.

The expression ‘domestic industry’ is defined as the producers of goods (including producers of agricultural goods)-

  • As a whole of the like goods or directly competitive goods in India; or
  • Whose collective output of the like goods or directly competitive goods in India constitutes a major share of the total production of the said goods in India.

The expression ‘serious injury’ is defined as injury causing significant overall impairment in the position of a domestic industry.

In no case the quantitative restriction shall continue to be imposed the beyond a period of 10 years from the date on which such restriction were first imposed.

Rules

The Central Government may, by rules provide for the manner in which goods, the import of which shall be subject to quantitative restrictions under this section, may be identified and the manner in which the causes of serious injury or causes of threat of serious injury in relation to such goods may be determined. The expression ‘threat of serious injury’ as a clear and imminent danger of serious injury.

For this purpose the Central Government made ‘the Safeguard Measures  (Quantitative Restrictions) Rules, 2012 vide Notification No. G.S.R. 381(E), dated 24.05.2012 which came into effect from 24.05.2012.

Authorized Officer

The Central Government shall, by notification in the Official Gazette, designate an officer not below the rank of Additional Director General of Foreign Trade as an Authorized officer for making investigation for the purpose of these rules.   He shall be responsible for conducting investigation for the purpose of imposition of safeguard quantitative restrictions and making necessary recommendation therein to the Central Government.   The Directorate General of Foreign Trade shall provide secretarial support and the services of such other persons and such other facilities as it deems fit.

Functions of the Authorized Officer

 The following are the functions of the Authorized Officer-

  • to investigate the existence of serious injury or threat of serious injury to domestic industry as a consequence of increased import of a goods into India;
  • to identify the goods liable for quantitative restrictions as a safeguard measure;
  • to submit its findings, to the Central Government as to the serious injury or threat of serious injury to domestic industry consequent upon increased import of goods into India from the specified country;
  • to recommend-
    • the nature and extent of quantitative restrictions which, if imposed, shall be adequate to remove the serious injury or threat of serious injury to the domestic industry; and
    • the duration of imposition of safeguard quantitative restrictions and where the period so recommended is more than one year, to recommend progressive liberalization adequate to facilitate positive adjustment; and
    • to review the need for continuance of the safeguard quantitative restriction.

Initiation of investigation

  • An application may be made by or on behalf of the domestic producer of likely goods or directly competitive goods in the prescribed Form to the Authorized Officer.
  • The application shall be supported with the following-
    • the evidence of –
      • increased imports as a result of unforeseen development;
      • serious injury or threat of serious injury to the domestic industry; and
      • a causal link between imports and the alleged serious injury or threat of serious injury
    • a statement on the efforts being taken, or planned to be taken, or both, to make a positive adjustment to increase in competition due to imports; and
    • a statement mentioning whether an application for the initiation of a safeguard action on the goods under investigation has also been submitted to the Director General of Safeguards, Department of Revenue.
  • The Authorized Officer shall, on receipt of a written application by or on behalf of the domestic producer of like goods or directly competitive goods, initiate an investigation to determine the existence of serious injury or threat of serious injury to the domestic industry, caused by the import of a goods in such increased quantities, absolute or relative to domestic production.
  • The Authorized Officer shall not initiate an investigation pursuant to an application, unless, it examines the accuracy and adequacy of the evidence provided in the application and satisfies himself that there is sufficient evidence regarding-
    • increased imports;
    • serious injury or threat of serious injury; and
    • a causal link between increased imports and alleged serious injury or threat of serious Injury.
  • The Authorized Officer may initiate an investigation suo moto, if, it is satisfied with the information received from any source that sufficient evidence exists

Public notice

The Authorized Officer shall issue a public notice notifying its decision which, inter alia, contain information on the following-

  • the name of the exporting countries, the goods involved and the volume of import;
  • the date of initiation of the investigation;
  • a summary statement of the facts on which the allegation of serious injury or threat of serious injury is based;
  • reasons for initiation of the investigation;
  • the address to which representations by interested parties should be directed; and
  • the time-limits allowed to interested parties for making their views known.

The Authorized Officer shall forward a copy of the public notice to the Central Government in the Ministry of Commerce and Industry and other Ministries concerned, known exporters of the goods, the Governments of the exporting countries concerned and other interested parties.

The public notice and other documents shall be deemed to have been received one week after the date on which these documents were put in the course of transmission to the interested parties by the Authorized Officer.

Forwarding of application

The Authorized Officer shall also provide a copy of the application to-

  • the known exporters, or the concerned trade association;
  • the Governments of the exporting countries; and
  • the Central Government in the Ministry of Commerce and Industry.

The Authorized Officer shall also make available a copy of the application, upon request in writing, to any other interested person.

Recommendations

The Authorized Officer shall provide opportunity to the industrial user of the goods under investigation and to representative consumer organizations in cases where the goods is commonly sold at retail level to furnish information which is relevant to the investigation including inter alia, their views if imposition of safeguard quantitative restrictions is in public interest or not.

The Authorized Officer may allow an interested party or its representative to present the information relevant to investigation orally but such oral information shall be taken into consideration by the Authorized Officer only when it is subsequently submitted in writing.

The Authorized Officer shall make available the evidence presented to it by one interested party to all other interested parties, participating in the investigation.

In case where an interested party refuses access to or otherwise does not provide necessary information within a reasonable period or significantly impedes the investigation, the Authorized Officer may record its findings on the basis of the facts available and make such recommendations to the Central Government as it deems fit under such circumstances.

Confidential information

 Any information which is by nature confidential or which is provided on a confidential basis shall, upon cause being shown, be treated as such by the Authorized Officer and not be disclosed without specific authorization of the party providing such information.

The Authorized Officer may require the parties providing information on confidential basis to furnish non confidential summary thereof and if, in the opinion of the party providing such information, such information cannot be summarized, such party may submit to the Authorized Officer a statement of reasons why summarization of such information is not possible.

If the Authorized Officer is satisfied that the request for confidentiality is not warranted or the supplier of the information is unwilling either to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information unless it is demonstrated to its satisfaction from appropriate sources that such information is correct.

Determination of injury

The Authorized Officer shall determine serious injury or threat of serious injury to the domestic industry taking into account, inter alia, the following principles-

  • in the investigation to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry, the Authorized Officer shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the goods concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilization, profits and losses, and employment; and
  • the determination shall not be made unless the investigation demonstrates, on the basis of objective evidence, the existence of the causal link between increased imports of the goods concerned and serious injury or threat thereof;
  • when factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports and in such cases, the Authorized Officer may refer the complaint to the authority for anti-dumping or countervailing duty investigations, as appropriate.

Final findings

     The Authorized Officer shall, within eight months from the date of initiation of the investigation or within such extended period as the Central Government may allow, determine whether, as a result of unforeseen developments the increased imports of the goods under investigation has caused or threatened to cause serious injury to the domestic industry, and a casual link exists between the increased imports and serious injury or threat of serious injury and recommend –

  • the extent and nature of quantitative restrictions which, if imposed, would be adequate to prevent or remedy ‘serious injury’ and to facilitate positive adjustment, as the case may be;
  • the extent of quantitative restrictions so that the quantity of imports is not reduced to the quantity of imports below the level of a recent period which shall be the average of import in the last three representative years for which statistics are available and justification if a different level is necessary to prevent or remedy serious injury;
  • the quota to be allocated among the supplying countries, and the allocation of shares in the quota for such specified countries which have a substantial interest in supplying the goods;
  • the duration of imposition of quantitative restrictions and where the duration of imposition of quantitative restrictions is more than one year, the progressive liberalization adequate to facilitate positive adjustment.

 The final findings if affirmative shall contain all information on the matter of facts and law and reasons which have led to the conclusion.   The Authorized Officer shall issue a public notice recording his final findings.    The Authorized Officer shall send a copy of the public notice regarding his final findings to the Central Government in the Ministry of Commerce and Industry and a copy thereof to the interested parties.

Imposition of quantitative restrictions

  The Central Government may based on the recommendation of the Authorized Officer, by a notification in the Official Gazette, impose upon importation into India of the goods covered under the final determination, a safeguard quantitative restrictions not exceeding the amount or quantity which has been found adequate to prevent or remedy serious injury and to facilitate adjustment.

  Any safeguard quantitative restrictions imposed on goods under these rules shall be applied on a non-discriminatory basis to all imports of the goods irrespective of its source.

Date of commencement

The safeguard quantitative restrictions levied under these rules shall take effect from the date of publication of the notification in the Official Gazette, imposing such quantitative restrictions.

Liberalization

 If the duration of the safeguard quantitative restrictions imposed  exceeds one year, the restriction shall be progressively liberalized at regular intervals during the period of its imposition.

Review

 The Authorized Officer shall, from time to time, review the need for continued imposition of the safeguard quantitative restrictions and shall, if, it is satisfied on the basis of information received that –

  • safeguard quantitative restrictions is necessary to prevent or remedy serious injury and there is evidence that the industry is adjusting positively, it may recommend to the Central Government for the continued imposition of quantitative restrictions;
  • there is no justification for the continued imposition of such restriction; recommend to the central Government for its withdrawal.

Where the period of imposition of safeguard quantitative restrictions exceeds three years, the Authorized Officer shall review the situation not later than the midterm of such imposition, and, if appropriate, recommend for withdrawal of such safeguard quantitative restrictions or for the increase of the liberalization of quantitative restrictions.

Any review initiated, shall be concluded within a period not exceeding eight months from the date of initiation of such review or within such extended period as the Central Government may allow.     

 

By: Mr. M. GOVINDARAJAN - November 3, 2018

 

 

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