Metal industry seeks stable policy

MUMBAI, FEB 15: The government should formulate a long-term policy for the growth of non-ferrous metals industry so that the industry can...

MUMBAI, FEB 15: The government should formulate a long-term policy for the growth of non-ferrous metals industry so that the industry can expand capacity and make more contribution to the national exchequer through exports, the Indian Non-Ferrous Metals Manufacturers Association said in a statement here today.

At present India imports non-ferrous metals approximately valued at one billion per year. Thus, unless rapid expansion of this industry is ensured through a stable long-term policy, drain of foreign exchange will be unavoidable, the statement says.

The non-ferrous metal industry is highly capital intensive and therefore unless the government assures a stable customs duty structure/policies, entrepreneurs will be discouraged from adding new capacity and even expanding existing capacities unless they are assured of a fair rate of return of their investments.

It said frequent tinkering with the customs duties particularly in the last few years has drastically affected the profitability projectionsmade in earlier years and has forced many promoters to even shelve their expansion/growth plans altogether.

It further said plan for the implementation of new projects of expansion of existing projects easily take a couple of years, apart from the time taken in their planning. However, in India import duties and other levies even on basic and strategic industries are being changed from year to year. This leads to sudden dumping through imports and accumulation of stocks. The domestic industry is thus made to suffer.

It is indeed ironical to note that when aluminium on the London metal Exchange during February and March 1997 was rulling at 1,600 per tonne, the customs duty was increased from 10 per cent to 20 per cent. In contrast, today when the LME is rulling at 1210-1250 per tonne, there is talk about reducing customs duty. This lowering of customs duty many lead to dumping by overseas manufacturers of the non-ferrous metals, the association says.