What is a Safeguard duty?
- Safeguard duty is generally imposed in the event of a sudden surge in imports which causes or threatens to cause serious injury to the domestic industry.
- Sudden increase in imports as a result of trade liberalization can put strain on domestic industries. Safeguard duties are a type of safety-valve to protect domestic producers temporarily while they adjust in order to become more competitive with foreign producers.
Why in News?
- The United Planters’ Association of Southern India (UPASI), the apex body of planters in south India, has sought suspension of natural rubber (NR) imports for two years and a levy of safeguard duty on imports for three years when the suspension is revoked.
- They claim that this would give time for the local industry to recover.
Need for a safeguard duty
- The natural rubber sector provides livelihood to 1.3 million growers.
- There has been a steep fall in prices in the domestic market for the last eight years and current prices are far below the cost of production. This is because of a surge in imports from southeast Asia.