Industry & Economy
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Paints
Customs duty cut perks up paints sector
Latha Venkatraman
CHEER TO paint industry
Mumbai
,
March 1
Faced with rising input costs the announcement of a reduction in peak customs duty on imports by 2.5 per cent to 12.5 per cent in the Finance Bill 2006/2007 has lent some cheer to the paint industry.
"For the paint industry, the reduction of peak custom duty by 2.5 per cent to 12.5 per cent will be beneficial as nearly 30 per cent of the raw material is imported by the industry,'' said Mr Ashwin Dani, Vice-Chairman and Managing Director, Asian Paints Ltd.
The Finance Minister's proposal to reduce customs duty on major bulk plastics like PVC, LDPE and PP from 10 per cent to 5 per cent is also beneficial to the paints industry as it would be to other industries as packaging costs would come down, said Mr Ashok Saini, Vice President - Special Projects, Goodlass Nerolac Paints Ltd.
The reduction in excise duty on small cars from 24 per cent to 16 per cent also augurs well for the paint industry especially in the automobile coatings segment. The thrust given to the infrastructure sector, with an accent on roads development, has an indirect benefit on paints industry as vehicle sales would increase, Mr Saini said.
"Overall, from this Budget we continue to remain optimistic on the growth of the paint industry. The Indian paint industry has historically grown by 1.5-2 times of India's GDP on a year-to-year basis. Now, with the Finance Minister announcing his vision of achieving 10 per cent economic growth, it can only augur well for the sector,'' Mr Dani said.
Analysts say that while the budgetary proposals do not offer many sops directly, the indirect impact of the growth-oriented measures would lead to higher demand for paints. The upward movement of Asian Paints stock on BSE reflected this euphoria. Asian Paints stock ended at Rs 690, with a gain of Rs 25 over the last two days. Goodlass Nerolac on the other hand lost Rs 17 to close at Rs 803 on BSE. Goodlass may have lost as it had had a build-up in price prior to the budget.
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