Page 286 - International Marketing

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288 International Marketing BRILLIANT’S

3. TARIFFS AND SMUGGLING
The present import policy (1984-85) for dry fruits has led to large-scale
smuggling of dry fruits into the country and in turn is hurting the bonafide trade.
Large quantities of dry fruits are stated to be smuggled into the country from
Pakistan, where there is no import duty on these items.
Trade circles point out that smugglers have come to dominate the country's
dry fruit trade during the past one year hurting not only the legitimate trade but
also government. It is pointed out that the smuggling has been facilitated by
the long common border between India and Pakistan which passes through
Punjab, Rajasthan and Kutch. Nepal too has been importing dry fruits liberally
through Calcutta Port, and a portion of these supplies are stated to be remain-
ing behind in India. Passengers coming from abroad, particularly those arriv-
ing from Pakistan by land and from West Asia by air, are known to be bringing
with them maximum possible quantities of dry fruits under the present bag-
gage rules. Yet another source of supplies has been the larger and regular
flow as gift parcels.
According to the Indo-Afganistan Merchants' Chamber of Commerce and
the Bombay Kharek Bazar and Mewa Merchants' Association, the smuggled
almond kernel from Iran is available freely at prices ranging from ` 100 to ` 125
per kg, when the cost of legitimate imports bearing the customs duty and other
imports works out to ` 190. Similarly, American almond kernel is being sold at
` 100 per kg. against the official cost of ` 150. The smuggled pistachio nut in
shell is available at ` 130 and pistachio kernel at ` 140/150 per kg., against the
landed cost of ` 170 and ` 210, respectively, of the products through trade
channels.
The total customs duty on almond amounts to 190 per cent and that on
other items to 140 per cent. The advantage to the smugglers is not limited to
the heavy import duties, but they save on Central and State sales taxes and
octroi duty, which together account for 10 to 12 per cent.
Trade circles have, therefore, been pleading that the import duty on dry
fruits should be reduced to about 100 per cent, inclusive of the auxiliary duty.
Such a step will reduce the profit in smuggling and can curb smuggling. The
loss in revenue to the government can be compensated by raising the import
quotas by 30 to 35 per cent. Such a rise in the import quota might increase the
country's annual imports from ` 30 crores to about ` 40 crores, but it might be
worthwhile since the country is already spending foreign exchange of this
magnitude unofficially.
Question:Would you accept or reject the recommendations of the Trade?
Give cogent arguments in favour of your decision.