Battery industry seeks change in duty structure

By S. Raghuraman

CHENNAI, OCT. 7. The manufacturers of industrial and automotive batteries are awaiting a positive announcement from the Central government in regard to the finalisation of the anti-dumping duty order. Earlier, in response to a petition filed by the members of the industry, the Government had imposed an anti-dumping duty on battery imports from Korea, China and Japan as an interim measure. The industry is also in the process of drawing the Government's attention on dumping of products from countries such as Taiwan, Thailand, Bangladesh and Saudi Arabia.

There is no apprehension on import of batteries which come into India at a reasonable price as the industry in general and Exide in particular is well equipped to compete those export countries in the market place. But in some cases manufacturers did not even meet the cost of production, Mr. S. B. Ganguly, Chairman of Exide Industries, indicated in the company's annual report.

Another major factor affecting the industry is the levy of common import duty of 35 per cent. The industry has drawn the attention of the Finance Ministry to correct the anomalous duty structure on raw materials and finished products. The same rate of custom duty of 35 per cent continued to be applied on lead, separator material and plastics as on the finished product.

Mr. Jayadev Galla, Executive Director of Amara Raja Batteries had observed that if differential duties were levied between raw materials and finished products, the net cost on finished products would come down. This would also help the industry to market products competitively both in the domestic and global markets. Mr. Ganguly had also cautioned that the low priced imports had begun to threaten the survival and long term prospects of the domestic battery industry.

The first quarter of the current year has not brought any comfort to the industry. The domestic and global downtrend and the dumping pressure had squeezed the margins as import and excise duties constitute about 42 per cent of total expenditure. According to Mr. Ganguly, most of these imported batteries have been sold in the replacement market and that was precisely the segment where the margins are higher. This has had a debilitating effect on the profits for the first quarter. However, the imposition of anti-dumping duty is temporary for six months. If the government issues final order for continuance of anti-dumping duty on imports of batteries, the pipeline stocks would get liquidated and create demand for the domestic producers, Mr. Galla felt.

The industrial battery segment faces a grim scenario. Two successive budgets without any increase in the revenue earnings of the railways, have severely curbed the capacity to purchase new equipment. Thus, tenders have been floated but have not been finalised. Cash crunch and a lack of an adequate transparent policy have also plagued the power sector, Mr. Ganguly observed at the AGM. Even amidst the current scenario, business in the automotive batteries would continue to hold good if the government revises duty structure.

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