The Hindu Business Line : Domestic players concerned over battery imports from Vietnam

VIETNAM is fast emerging as a major exporter of batteries to the sub-continent. According to industry sources, the main reasons behind this are the negligible domestic demand and the low import duty on lead and cheap labour.

Imports from Vietnam had risen from 50,595 pieces (Rs 1.15 crore) in 2001-02 to 124,479 pieces (Rs 4.32 crore) in 2002-03 before rising to 787, 494 pieces (Rs 19.43 crore) in 2003-04. In terms of the total battery imports into the country, Vietnam's share has gone up from 1.8 per cent in 2001-02 to 4.3 per cent in 2002-03 and 22.92 per cent in 2003-04. According to figures available with the Directorate-General of Commercial Intelligence and Statistics (DGCIS), during April-July this financial year, 139,918 pieces of Vietnamese batteries were imported in India valued at Rs 4.37 crore, taking Vietnam's share in total imports to 16 per cent.

While more recent figures are not available, the industry sources say that imports from Vietnam are set to touch a new high during the current year. According to them, the consumption of batteries usually picks up after a lean patch during the monsoon and that the bulk of the imports will take place after August-September.

The situation has worsened in the wake of the recent customs notification effecting duty-free import of sealed maintenance-free (SMF) batteries, which, according to sources, has opened the floodgates for an entire range of product imports.

The only good news is an automobile sector-driven high demand growth in China during this fiscal, which is expected to bring about some change in the trade dynamics for the time being. Previously a net exporter of batteries, the country is now importing batteries in large quantities.

Apart from Vietnam, the countries on the watch-list of the Association of Battery Manufacturers of India (ABMI) are Indonesia, Malaysia and Thailand, all of which have large production capacities against low domestic demand.

"We are especially worried about Thailand where all the three major producers are currently producing at 60-65 per cent capacity because of low domestic demand," say the sources. The threat perception has increased with the signing of the free trade agreement.

While the customs duty structure in India is obviously a major source of worry for the domestic manufacturers, unhelpful policies pursued by some neighbouring countries like Bangladesh have added to the trouble.

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