REMOVAL OF QRs - IMPLICATIONS

Starting April 1st 2001, in compliance with India's WTO obligations, the Government has removed Quantitative Restrictions on the last batch of 715 items for imports. The Indian consumer now has access to most international products and brands that he or she ever aspired for...Baccarat crystals, Baume & Mercier watches, Tiffany Jewellery, Elizabeth Arden, Gerard Perregaux watches...you name it, and you are gonna have it.

How will 'India Inc.' handle this close encounter with the rest of the world? Will Indian Companies lose their customers? Will the Indian consumer suddenly switch loyalties?

In the given situation, has the Government put in enough shock absorbers? Namely, balance availability and affordability. The non-tariff barriers are still high on some products. The Government has classified certain sectors as 'sensitive' like, cars, jeeps, fruits, vegetables, coffee, tea, poultry products, dairy products, rubbers, toys, pencils and fountain pens etc and has put in a number of non-tariff barriers. For instance, though second-hand car imports are allowed, a number of conditions have been placed on these imports; no left-hand driven vehicles, no vehicles over 3 years old, no entry except through the Mumbai port etc. Similarly, foodstuff can be imported only after a strict quality check. Items such as petrol, diesel, urea, maize, wheat, rice etc can come in only through designated State trading agencies. Over 300 such items have been placed on a 'watch list', and this list will be constantly reviewed based on the import pattern. So lets not get confused between availability and affordability...

The next question that comes to your mind is - 'Affordable to whom?' To the majority of Indians, the removal of quantitative restrictions is still some vague economic theory.

Yes, the premium products and brands from the domestic arena are in danger, as most of the imported products only address that segment. Imagine someone from the middle income group buying a Dunhill cigarette lighter for Rs 20,000/-. So these products still address only 30% of the populace. Domestic products that are made for the remaining 70% can hardly be written off.

On the flip side, the aggressive marketing strategies employed by some of the imported brands that are already there in the market, have created awareness and improved sales of some of their home grown counterparts. Example, Kellogg's brought home the point that Mohun's cornflakes has been around for a very long time in this country.

Next to availability and affordability comes the issue of adaptability. Will the Indian consumer's habit change overnight. Indians will probably give them a great trial rate. But how many will go back to buy it again. Multinational companies will have to think of making products and marketing plans which are specific to this market, to be successful in the long run.

So, this removal of quantitative restrictions does not necessarily spell doom for Indian industry. They are recognising the importance of a good product, good packaging and sensible marketing strategies. In the long run, Indian Companies will have to come out of complacent ideas and will have accepted the challenge to reinvent themselves.

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