Financial Daily from THE HINDU group of publications
Wednesday, Mar 02, 2005
Industry & Economy
Lead storage battery cos laud cut in Customs duty
Kolkata , March 1
THE Finance Minister, Mr P. Chidambaram, has presented a `dream Budget' for the lead acid storage battery manufacturers in the country.
Responding to the long-standing demands of the domestic industry, he has proposed a reduction in Customs duty on lead from 15 per cent to five per cent.
Incidentally, it was Mr Chidambaram who had reduced the duty from 20 per cent to 15 per cent last year.
Storage battery majors like Exide Industries have announced a price cut on their products.
As lead constitutes over 70 per cent of the total cost of a storage battery, the cut in duty is expected to offer a level playing field to domestic industry, which has to compete with imported batteries from China, Malaysia, Thailand, Taiwan, Bangladesh, Sri Lanka, Indonesia, and the Philippines.
As a matter of fact, apart from Indonesia, all other neighbouring countries charge in the region of zero to three per cent duty on imported lead.
Indonesia charges the maximum duty of five per cent. Describing Mr Chidambaram's announcements as "a major relief to the domestic storage battery industry", Mr S.B. Ganguly, Chairman of Exide, said that the company would pass on the benefits to its customers from March 2005.
While the price details are yet to be worked out, the company expects prices of its entire product range to be reduced by an average of five per cent.
While the development is expected to reduce the import of batteries in the country, Mr Ganguly feels that the thrust on the infrastructure sector, especially road and power sector, would offer increasing opportunities to battery manufacturers.
Dry-cell battery manufacturers, however, feel that irrespective of a reduction in the import duty on zinc, they may have to resort to a price rise to cope with the global rise in zinc prices.
"The reduction in import duty will not be of much help as zinc prices have gone up substantially. We also may have to pass on this rise in input prices marginally to customers," said Mr Deepak Khaitan, Vice-Chairman and Managing Director of Eveready Industries.
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