Kochi: With the US lowering its anti-dumping duty on shrimps shipped from India to 1.69% from 7.22%, domestic exporters are looking forward to a matching cut in fresh cash guarantees, or customs bonds.
Shrimp exporters are required to deposit cash guarantees to cover any increase in the anti-dumping duty, usually at the same rate as the duties. The bonds are renewed every year for three years.
Exporters shipped shrimps worth Rs1,143 crore to the US between February 2006 and January 2007, the period of the second annual review for which the anti-dumping duty has been cut.
Sailing on: A US shrimp trawler. The country first imposed the duty on Indian shrimp exports in 2004, claiming that they were underpriced. (Photo: Gerald Weaver)
They paid about Rs114 crore towards customs bonds, including expenses.
“The collection of bonds of matching amounts as a guarantee by the US authorities has been a financial drain on exporters, making shipments difficult,” said Anwar Hashim, president of the Seafood Exporters Association of India. “The duty cut will now bring down the bond rates, too.”
Customs bonds for new shrimp exports can now be taken at 1.69%, plus expenses.
The World Trade Organization’s (WTO) disputes panel has ruled in favour of India against the imposition of the customs bonds, but the US has till September to file an appeal.
The US first imposed the duty on Indian shrimp exports in 2004, at a rate of 10.54%, claiming that India was selling shrimps to it at a lower price than to any other country.
Last year, it cut the duty to 7.22% after its first annual review?for?the?period?August 2004 to January 2006.
A preliminary review in March had suggested lowering the duty to 1.06%.
Devi Seafoods Ltd and Falcon Marine Exports Ltd, mandatory respondents or sample companies for the second annual review, were selected to help the US fix the anti-dumping duty for other Indian shrimp exporters as well.
After the final determination, the anti-dumping duty for Devi Seafoods, India’s largest exporter to the US with 15% of the total value, has fallen to 0.35% from 4.93%.
Since exports with duty below 0.5% are not treated as dumped material, the company will not have to pay any duty.
Falcon Marine, which accounts for about 12% of Indian shrimp exports to the US in value terms, has seen its duty fall to 1.69% from 4.39%.
“Paring the duty will prove beneficial to the industry,” said Devi Seafoods managing director P. Bramhanandam.
With the third annual review, all Indian shrimp exporters could fall below the 0.5% limit, he added.
The process for the third review, due for preliminary determination in March for the period 1 February 2007 to 31 January, has begun. Devi Seafoods and Falcon Marine will again represent India.
“India has an advantage now, but it’s important for the industry to maintain this level, even if it cannot bring down the duty further,” said G. Mohankumar, chairman of trade promotion body Marine Products Export Development Authority.
However, while 68 shrimp exporters who responded to the US second review would gain, about 200 others who did not participate would have to pay 110.9% duty if they want to export to the US.