Financial Daily from THE HINDU group of publications
Friday, Feb 15, 2002
Industry & Economy
Government - States
Bengal to have paints testing facility
KOLKATA, Feb. 14
THE West Bengal Government has, in principle, agreed to the proposal of the paints sector to set up a latest paint-testing facility in the State, especially to benefit the large number of SSI units. The paints sector has urged the State Government to allot land for this purpose at the earliest.
Addressing the inaugural session of the 39th annual general meeting of the Indian Paints Association (IPA) here, the State Minister for Commerce and Industry, Mr Nirupam Sen, said the IPA, to keep pace with the continuous changes in people's tastes, should give due emphasis to R&D. The Minister felt the industry could flourish only if it could match the changing needs of its clientele.
Stressing the need to make indigenous paint products cost-effective and globally competitive, he urged the paints sector to establish greater interaction with the panchayat raj institutions and municipal bodies as part of its business strategy, so that the per capita paint consumption in the country (now abysmally low at 250 gm) could go up. The protection it gave to different types of assets would have to be properly communicated.
Pointing out that a large quantum of assets had been created over the last several years in rural areas, he suggested that the industry should take advantage of the emerging rural affluence along with changes in people's tastes, and explore how they could penetrate this large market effectively. He said the sector should identify itself with the interests of the people and participate in the creation of social assets as a part of strengthening business network and also build up the confidence of the clientele.
Mr Ahwin Dani, President of IPA, urged the Government to repeal the Urban Land Ceiling Act in all the States, which might benefit the paint industry significantly, as "real estate prices will fall, and consumers will be able to afford painting of their houses periodically, benefiting both the housing and paints sectors.''
On the budget expectations of the sector, he said duty anomalies such as same level of duty (35 per cent) for both paints and raw materials, should be corrected. This is particularly glaring, as the import content of raw materials for industrial coatings is nearly 60 per cent, while that for architectural coatings it is only between 20 per cent and 40 per cent.
Pointing out that paint companies in the SSI sector were not able to avail of the Cenvat benefit, he suggested that in their case, the exemption limit should be raised to Rs 2 crore, and thereafter a graded structure for production up to Rs 5 crore, where the duty should not exceed 10 per cent. He said full rate of duty should apply only if production was above Rs 5 crore.
Touching on the major problems of the sector, Mr Dani said while the demand for paints was stagnating, large quantities of architectural paints from the US were being dumped in India, at an import price as low as Rs 17.50 per litre, which did not cover even the basic cost of titanium dioxide and packaging material.
He urged the Government to initiate immediate action to impose anti-dumping duty for the survival of Indian paint industry.
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