India’s Ministry of Commerce has proposed the imposition of yet another new measure to eliminate a loophole in the minimum import price (MIP) for steel and prevent illegal transfers of funds from overseas, a senior government official said on Thursday, March 31.
The government official said that the Ministry of Commerce has suggested to the Ministry of Finance that the new measure should be equivalent to the difference between the MIP and the realized price of imported steel, as the latter was lower than the MIP.
Elaborating on the threat of the illegal transfer of funds, the official said that it is feared that importers could be lured to show over-invoiced transactions at MIP, while the actual value of imports were lower. The difference between the two would be kept by the importer overseas and channeled into India through illegal fund transfers popularly known in the local language as “hawala transactions”.
The official also said that the Department of Revenue Intelligence (DRI), the investigative wing under the finance ministry, has been asked to keep track of all bulk steel import transactions to check possible over-invoicing and illegal fund transfers outside the banking system into the country.