In a development that could pose grave risks for some key heavy industries of the country, especially the automobile sector, the developed world led by the US and the EU have introduced a concept of ?re-manufacturing? in the WTO. They have demanded that re-manufactured products be given the same tariff treatment as brand new goods, a contention that has been strongly refuted by India and China.
Sensing that developed countries could use this to dump worn out second-hand goods in India, New Delhi has shot across a point-by-point rebuttal to the concept of re-manufacturing to over 150 WTO members.
As the name suggests, re-manufacturing means repairing, rebuilding or refurbishing a product from scratch. In fact government sources said the rationale being used by the US and EU is that re-manufactured cars and equipment ?become as good as new.?
They have demanded that re-manufacturing be brought into the ambit of negotiations and treated at par with Nama, agriculture and services. Currently, new cars in India have an import duty of close to 110%. Though the government does not impose any extra duty over this on second hand cars, but the exporter has to seek a licence from the government, which is not easy.
When contacted commerce secretary Rahul Khullar said, ?There are several problems in this concept of re-manufactured goods. Firstly, there is no clear definition of what constitutes a re-manufactured good. The US is mainly pushing this for a select bunch of companies. Secondly, there are no tariff lines on reconditioned or second-hand goods. Hence, how do you evaluate the tariff value for determining tariff revenues. Also, how do we know whether re-manufactured cars being sold in India is not merely a second hand one being shipped,? he said.
In an over 15-point scathing rebuttal of the concept, India has cited several inherent drawbacks in the definition, from questioning its viability to the possible infringement of intellectual property rights. One of the points in the paper said, ?The definition does not seem to look at the differences in some other terminologies related to remanufacturing such as refurbished, recycled, re-used, repaired, reconditioned, recovered, second hand, replaced, serviced, re-hauled, recharged, rebuilt etc.?
The paper has also questioned how remanufacturing does not take into account the durability of the product. ?Fatigue of metal or the components of any product that is used for re-manufacturing would clearly affect the life of the re-manufactured product. The concept of ?as good as new? used repeatedly by the co-sponsors or even the term ?restored to original working condition or better? used in the proposed definition seems to mask this aspect,? it said.
A commerce ministry official told FE, ?In the developed world cars are usually replaced every two to three years. Hence they want a market where they can dump these cars. If they are so convinced that post-remanufacturing the car would become new, then why not use it in their own country.?
Automobile industry also reacted sharply. Director-general of the Society of Indian Automobile Manufacturers Association (Siam) Vishnu Mathur said that such a move could severely impact the auto sector. ?These remanufactured cars would have a competitive advantage since they would be 40-45% cheaper than new cars,? he said. Mathur said that US has an organised remanufacturing industry, which gives them an advantage. ?Do we have a global authority which is going to certify these products?? Mathur asked.
Former CII president and chairman of TVS Motors Venu Srinivasan said that developed countries have tried to push such products into India with little success because the government has strongly resisted such attempts. Chairman of Maruti Suzuki RC Bhargava said, ?Even if a car has travelled 30,000 km in the West, can it still be considered for remanufacturing? The very concept that re-manufactured cars become as ?good as new? is flawed,? he said.