NEW DELHI: The domestic bicycle industry on Thursday urged the government to keep the labour-intensive sector out of the purview of the proposed mega free trade agreement RCEP as any cut in customs duty would hit manufacturing.
The Regional Comprehensive Economic Partnership (RCEP) agreement is being negotiated among 16 countries including the 10-member Association of Southeast Asian Nations (ASEAN), India, China, Japan, Australia, New Zealand and South Korea.
Ludhiana Handtool Association President S C Ralhan said the presence of China in the grouping is a big concern for domestic bicycle industry as it is already facing problems due to significant increase in imports from the neighbouring country.
"India's bicycle imports from China stood at about Rs 1,600 crore in 2018-19 and this is a big figure given the fact that the sector engages mainly small and micro-units," he said.
The import is happening despite the fact that there is a 30 per cent basic customs duty on a bicycle and 20 per cent on bicycle components.
He alleged that China is also exporting through Sri Lanka and Bangladesh as no import duty is there for these two countries.
"The customs duty is like oxygen for the industry and any cut in the duty will have severe implications. It would lead to unemployment if the government would commit to cut duty in RCEP," Ralhan added.
He said that the industry has taken up the matter with the commerce ministry. Sharing similar views, United Cycle and Parts Manufacturers Association President D S Chawla said that the industry needs support from the government to push its growth and increase job creation.
"We are adopting modern technologies to manufacture high-end bicycles, but we need strong support of the government.
Small and tiny players are involved in the sector and they need hand holding of the government," he said. China mainly exports high-end bicycles in India. As many as 100 components are there in a single unit and India is import-dependent for 15 critical parts including gear.
In 2018-19, production of bicycle stood at 2.2 crore units. India exported about 10 lakh units last fiscal and imported 8 lakh units.
These views assumed significance as some other sections of the Indian industry too have raised concerns over the presence of China in the grouping.
Various sectors, including dairy, metals, electronics, and chemicals, have urged the government to not agree on duty cuts in these segments.
The agreement is expected to be concluded by November and signed in 2020. As many as 28 rounds of talks have been held at chief negotiators level and no more rounds are scheduled now.
India has registered trade deficit in 2018-19 with as many as 11 RCEP member countries including China, South Korea and Australia.
The agreement aims to cover issues related to goods, services, investments, economic and technical cooperation, competition and intellectual property rights.