Make in India’ the most significant project of the Indian Government may hit a roadblock, courtesy cheap imports entering via Asean trade pact. These cheap products are entering inside Indian market by misusing the free trade agreement with the Association of South East Asian Nations. The free trade pact between India and ASEAN allows import of goods at zero or concessional customs duty from a member-country if reasonable value addition has been carried out there.

As per the reports, the issue came into limelight after the officials found out about the entry of goods such as mobiles from China via an ASEAN member country without any substantial value addition, in violation of rules of origin. The Ministry of Electronics & Information Technology wrote to the Finance Ministry pointing at the sudden influx of mobile phones from Malaysia.  

Imports from Malaysia climbed 49% to INR 140 billion (USD 2 billion approx..) in April-May from INR 95 billion (USD 1.36 billion approx.) in the same period last year. Total imports from Asean nations have risen to INR 33 trillion (USD 47.1 billion approx.) in FY18 from INR 28 trillion (USD 41.3 billion approx.) in FY14.

These imports are happening after July 2017, when the customs duty on smartphones, automobile components, television LED/LCD and OLED panels, fruits were increased. According to a report in the newspaper daily ‘Economic Times’, the Directorate of Revenue Intelligence, or DRI, is enquiring into imports of mobile phones and other telecom and IT equipment under the FTA route after allegations of abuse. ‘The agency has been asked to look into the issue’ said a government official privy to the development.