Import duty on scrap makes local recycling uncompetitive, import intensifies, India may lose Rs 11000-cr exports markets
Hit hard by the recent levies of import duty on scrap, around 4,500 metal recycling units are facing closure due to cheaper import from Asian countries; worse is in store with the process of signing Free Trade Agreements (FTAs) with these countries.
There is now a tariff of 2.5 to five per cent on import of all metal scrap, the raw material for producing small articles made of brass, copper and steel for applications in households and artifacts. With the rupee setting a new low record every other day, import of metal scrap has already made articles from secondary metals costlier.
The waning demand for these articles due to overall weak economic sentiment has already made life difficult for these units. Borrowing fresh capital will raise manufacturing cost due to the high interest rates.
“Scrap recyclers, therefore, met Prime Minister Manmohan Singh on Monday with a request to look into the matter and provide them a level playing field. The Prime Minister assured us that he would look into the issue,” said Dhawal Shah, vice-president (non-ferrous), Metal Recycling Association of India.
India is the only country in Asia which has levied import duty on raw material after four years of suspension. Others in the region have freed the import of metal scrap. Our duty has provided a cushion to exporters of these items that compete with India in developed markets. Also, being a low margin business, import of these items works out to be cheaper than manufacture in India.
“With the rupee hitting a record low of 63 against the dollar, the government’s attention should be on export promotion. Levying import duty on raw material is counter-productive,” said Rohit Shah, managing director of Perfect Valves, a Mumbai-based producer of articles from secondary metals.
India imports around 7.5 million tonnes of metal scrap annually. With domestic scrap generation largely dominated by unorganised sector collectors, metal recyclers have to depend on imports to produce 10 mt of castings annually.
We do not have any option but to close our manufacturing units if the import duty is not rationalised to zero to compete with other Asian countries,” Shah added.
“The import duty on scrap of iron and steel, stainless steel and aluminium in most other competing countries is nil. Hence, the levy by the Indian government will make our Industry uncompetitive. This will also lead to an inverted duty structure, since metal produced from scrap by FTA countries is allowed duty-free, whereas import of scrap by manufacturers is being subject to import duty,” said A K Anand, Foundry Informatics Centre, the association of foundry units.
Source; business-standard.com
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