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Vinod Mathew

"As the Supreme Court ruling pertains to the ANSAC, the world's largest soda ash exporting cartel comprising six US companies, the Indian manufacturers are convinced that a price war would be the most likely outcome in the short-term while it would pose questions about the overall resilience of the domestic industry in the long run."

AHMEDABAD, Jan. 10

THE Rs 1,400-crore per annum soda ash industry, with over 95 per cent of the major manufacturing units located in Gujarat, has good reason to believe it was short-changed in the last Union Budget.

Now, with the 2002-03 Budget just around the corner, the Alkali Manufacturers Association of India (AMAI) is going full throttle to get an upward revision of import duty on soda ash from 20 per cent to 35 per cent.

The reasons are not hard to find as the country, with an annual production of 26 lakh tonnes, is faced with a surplus market to the tune of almost six lakh tonnes. The Indian soda ash manufacturers - - comprising five units in Gujarat and one in Tamil Nadu - - are already beginning to feel the heat of the latest Supreme Court decision on restrictive, unfair and monopolistic trade practices. With the apex court deciding against passing any judgment restraining foreign companies from exporting to India, it appears that the floodgates on natural soda ash would finally be opened.

"It is not fully appreciated that this is poised to send the Indian soda ash industry, already pushed to the limits by the downward revision of import duty from 35 per cent to 20 per cent in 2001, into a point of no return. As the Supreme Court ruling pertains to the American Natural Soda Ash Corporation (ANSAC), the world's largest soda ash exporting cartel comprising six US companies, the Indian manufacturers are convinced that a price war would be the most likely outcome in the short-term while it would pose questions about the overall resilience of the domestic industry in the long run," Mr Kapil Mehan, Vice-President, Sales & Marketing, Tata Chemicals Ltd, and a spokesman of AMAI, told Business Line.

The newly-elected Government in Gandhinagar, which is looking to shore up the State's sagging image as a destination for industrial investment, may not pay to play a passive role especially as the Centre is likely to lend a sympathetic ear to the Chief Minister, Mr Narendra Modi.

With some1.5 lakh people employed in the primary, secondary and tertiary sectors and an additional 10 lakh persons involved in salt production and lime stone mining being at the receiving end, the soda ash industry expects that a positive role played by the Gujarat Government can go a long way in reverting the import tariff to 35 per cent.

The most compelling reason for an intervention by the Gujarat Government may be that five of the leading soda ash manufacturers are located in one of the industrially backward regions of the State. While Tata Chemicals Ltd (8.75 lakh tonnes), Nirma Ltd (6.5 lakh tonnes), Gujarat Heavy Chemicals Ltd (5.25 lakh tonnes), Saurashtra Chemicals (3.65 lakh tonnes) and Dhangadhra Chemicals (0.96 lakh tonnes) are located in and around Saurashtra, it is only Tuticorin Alkalies and Chemicals (1.15 lakh tonnes) that is located outside the State.

"The Indian soda ash industry, with a replacement cost of Rs 6,000 crore, feels it has a case on hand as it has been meted out step-motherly treatment in successive Union Budgets as an intermediate product, the targeted beneficiaries being the glass and detergent industries. However, there have been no commensurate reduction in the prices of either detergents or glass during the current fiscal and the end consumer has in no way benefited," Mr Mehan said.

It may well be that the Indian soda ash market will soon get a feel of the ANSAC might wherein it will replicate the China pattern where it started dumping at around $100 per tonne against the prevalent rates of $135 per tonne. While China, which exports around 1 million tpa, could withstand the onslaught, it may be a different story for the Indian soda ash industry, which had till 1996 been a heavily protected one, with a 40 per cent import duty.

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