Steel wire units seek duty reform
Imports, legal and illegal, set to cross 40,000 tonnes
| The wire drawing industry aimed to exploit capacities, update technology, focus on value added products, reduce costs and boost on exports through innovation. SWMAI would like the government to take steps to discourage import of steel wires and wire ropes. |
| China's emergence as a net exporter of steel and dumping by competitor countries were among dangers facing the Indian steel wire industry. |
| Indian units were adversely affected by cheaper imports of ACSR core and PC wires through Nepal by non-Nepalese international wire manufacturers, illegally routing products to India through Nepal using the MFN treaty between India and Nepal, it alleged. |
| Chinese wire rope prices were 30 lower than Indian prices while wire was cheaper by Rs 3,000/4,000 less per tonne. Net import of steel wires and wire ropes between April-September 2005 crossed 21,090 tonnes, compared to 31,690 tonnes in April 2004-March 2005. |
| Imports, legal and illegal, looked set to cross 40,000 tonnes in the April 2005-March 2006 period, depicting a 27 per cent increase over the last fiscal. |
| This would destroy domestic steel wire utilities. |
| SWMAI would therefore like the import duty on steel wires and wire ropes to be raised to 15 per cent. Further, steel wire should be treated as a manufactured item, unlike wire rod, which was a form of basic steel. To boost export of steel wires and wire ropes, specific export incentives were needed to enhance the general competitiveness of Indian production costs. With suitable export incentive schemes, and resolution of pending Central Excise issues caused by withdrawal of CENVAT credit availed by wire drawing units during the period from May 29, 2003 and July 8, 2004, would greatly help exports, according to SWMAI. Steel wire units landed in bad times following an order of the Supreme Court which ruled that drawing of wires from wire rods did not amount to manufacture. In the 2004-05 budget, the government had distinguished steel wires from wire rods by bringing the wire drawing activity from wire rod under the purview of "manufacture", by inserting a section note to this effect in Section XV. |
| However, for the interim period of May 2003-July 2004, units were harassed by the Central excise department, SWMAI alleged. The Ministry of Finance later proposed retrospective amendment in Rule 16 of the Central Excise Rules 2002 by the Taxation Laws (Amendment) Bill 2005 through Bill No 74 of 2005, which was introduced in the Lok Sabha on May 12, 2005, effective retrospectively from May 2003 to July 2004. |
| The Bill was referred to the Standing Committee on Finance and was now pending for consideration of Parliament. SWMAI said the passing of the pending bill would greatly ease problems faced by manufacturers. SWMAI members produced 1.6 million tonnes of steel wires last fiscal. The Indian wire industry's growth had been largely driven by the growth of the infrastructure and automobile sectors. The industry had been growing about 5-7 per cent in the last two years. |
| Availability of steel wire rods was expected increase following expansion of capacity at existing steel units and new steel plants being set up. Demand for wires was expected increase in parallel in the years to come. The per capita consumption of wire out of per capita consumption of steel was only 5 per cent. The share was expected increase to 7"�8 per cent as the market developed. |