The Hindu Business Line : `Duty sops to import copper cathodes may hit small units'

THE decision to allow import of materials at concessional duty rates for use in the manufacture of goods of a specific description will have grave implications on a large number of small-scale intermediary units of copper, brass and aluminium products, Mr Ashok G. Bafna, President of the Bombay Metal Exchange (BME), has said.

As per Customs Notification No. 27/2004, dated January 23, 2004, the Government has extended a concessional rate of customs duty on refined copper cathode at 10 per cent and copper tubes at 15 per cent.

"This is the second reduction in customs duty since the change in peak rate of duty earlier. This move makes imported copper tubes much cheaper than the locally made Indian copper tubes. It will only complicate the problems faced by the domestic industry," said MrBafna in a written representation to the Finance Ministry.

"We will meet the Finance Minister, Mr Jaswant Singh, in this regard. We have requested the Government to keep duty difference of 5 to 10 per cent basic raw materials (for example, copper cathode and wire bar) and the finished products (such as tubes strip and foils)," he said. This will give a level-playing field and eliminate misuse and manipulation.

"All the major manufacturers of air-conditioners and refrigerators in the country, such as Voltas, Blue Star and Videocon, will not purchase copper tubes from local units when they can import at cheaper price, paying 15 per cent import duty," he said.

"On the other hand, the small-scale manufacturer who imports the basic raw materials such as cathodes for the manufacture of copper tubes will have to pay as high as 20 per cent customs duty. Plus, local units will have to pay other charges, such as Octroi, electricity, high cost of petrol, diesel and furnace oil, C.S.T, turnover tax, surcharge and other local levies, which come to nearly 10 per cent," Mr Bafna said.

"The locally made copper tube will be costlier by 15 to 20 per cent than the imported one. Since the local manufacturer has to pay customs duty of 20 per cent on the basic raw material such as cathodesused as an input. All leading manufacturers of air-conditioners and refrigerators will rather import copper tubes (finished product used as a input), which will be cheaper," he added.

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