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Nandini Goswami
Calcutta: A reduction in the 40 per cent customs duty slapped on rutile, the primary ingredient for the manufacture of paints, has been a major contention of the paint industry.
The requirement of roughly 30,000 tonnes of rutile per annum has forced the industry to ask for a reduction in the duty rates of this pigment.
According to industry observers, this rate is a much higher rate as opposed to all other chemicals and raw materials which have 30 per cent duty. This in turn has propelled a rise in prices in an arbitrary manner, they claim.
The disparity, said industry observers, has pushed up the market cost of imported rutile and also allowed the domestic supplier Kerala Minerals and Metals Ltd (KMML) to raise prices. It may be noted that KMML happens to be the only producer of rutile in public sector in India.
The duty on finished goods is 30 per cent while that on raw materials and intermediates is at the same level. A rationalised structure should ensure that import duty on raw materials andintermediates is lower than that of finished goods in order to provide relief to domestic manufacturers and ward off unfair dumping by foreign companies.
A rationalisation of duty between raw materials and finished paints should be brought about, the industry felt.
This apart, the industry has also called for a reduction in excise duty from 18 per cent to 15 per cent.
Industry observers said that the annual loss of steel in India due to corrosion is over Rs 12,000 crore and a substantial portion of this loss may be prevented with proper use of painting.
The industry in its pre-budget memorandum has also suggested that the rate of the duty on intermediates be brought down to 10 per cent from 18 per cent at present.
This will primarily help the small scale units to reduce the input costs who are not able to avail of the MODVAT facility.
The maximum retail price abatement of 40 per cent should be raised to 50 per cent, the industry felt.
The industry has also called for a withdrawal of 4 per centadditional import duty as more than 50 per cent of the raw materials in the industry is imported. A waiver on the safeguard duty on carbon black, an essential raw material used by the paint industry was warranted.
The Indian Paint Association, a forum for all paint manufacturers has asked the government to raise the exemption limit for excise duty from Rs 50 lakh at present. The industry's contention is that the small scale sector which contributes about 40 per cent to the total output also accounts for a large portion of the total employment.
It may be noted that the SSIs are generally prone to poor credit facilities and delayed payments.
The industry has asked for infrastructure support in the form of industrial sheds, setting up technology banks to help the SSI units to introduce new technology with special initiatives as part the rejunevation strategy.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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