The Hindu Business Line : Tile industry pitches for lower import duty on raw materials

DOMESTIC tile manufacturers have urged the Government to reduce the import duty on raw materials. They have pointed out that the duty cut would help lower the price of tiles. "Reducing the customs duty on import of raw material to 10 per cent would help the manufactures lower the price of the product," said Mr Sanjeev Agarwal, General Manager, Finance, Kajaria Ceramics Ltd.

The duty reduction is also necessary to correct the inverted duty structure that prevails in the industry. The domestic manufacturers said that they have to pay 15 per cent duty on raw material imports, while the tile itself can be imported from China at a duty of 6.45 per cent. This has led to `heavy' imports from China.

According to an industry estimate, the import of tiles from China has increased by 300 per cent in the first nine months of the current year compared to 2004.

With China's inclusion in the Bangkok Agreement, the customs duty on tile imports from China was brought down to 10 per cent, which was further brought down to 6.45 per cent in July this year.

The Indian Council of Ceramic Tiles and Sanitaryware made a representation to the Finance Ministry to roll back the additional concession given on import of ceramic tiles from China.

The manufacturers also want the Government to remove tiles from the negative list of the Bangladesh, India, Sri Lanka, Thailand Economic Cooperation (BIMSTEC) Free Trade Agreement. The Government had included tiles in the negative list of the BIMSTEC FTA on the grounds that they were `luxury products,' disallowing tile trade between India and its neighbours at lower duty structures. The manufacturers say that the removal would not only boost exports from India, but also help countries such as Sri Lanka and Bangladesh get high quality tiles at a cheaper price.

The tile manufacturer H&R Johnson (India) Ltd has said that export of tiles from India has been falling and is projected to go below one per cent in a few years. Mr Vijay Aggarwal, Managing Director, H&R Johnson, said, "This one per cent would not be sufficient for the industry's overall growth. The additional concession given on import of tiles from China will not allow the local manufacturers a level-playing field. It is unfortunate that the Government is not encouraging local investments into the Indian tile industry."

The Federation of Indian Chamber of Commerce and Industry (FICCI) has also asked the Government to increase the rate of abatement provided to the industry to 50 per cent from the present 45 per cent. The rate of abatement is the percentage by which a manufacturer can bring his post-manufacturing expenses, such as transportation, down for tax calculation. In its pre-budget memorandum to the Finance Ministry, FICCI has said that increasing the rate would enhance the price competitiveness of domestic manufacturers. With the inverted duty structure, the Government is going against its own policy of providing a level-playing field to the domestic tile industry, the chamber added.

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