Jamnagar brass industry shows signs of recovery

After a long wait of over two years, the brass industry of Jamnagar seems to be regaining its lustre, owing to the government’s recent reduction of the tariff on brass scrap, combined with the sharp drop in raw material prices. Add to that the fact that the demand for brass in the domestic market has also increased, triggering the recovery of an industry that was on the brink of closure, with many players having downed their shutters.

One of the main centres of the Indian brass industry, Jamnagar plays host to several producers who use brass scrap to make a range of products from pins to airplane parts. According to sources in the industry, Jamanagar houses 4,000-4,500 brass parts units, which provide direct employment to 50,000 people and indirect employment to 150,000 people.

In recent times, due to the global downturn, the industry's sales turnover has declined from Rs 2,000 crore to Rs 1,200 crore in a year.

Production of brass has declined by 70 per cent since October.

However, in January the industry received a much-needed shot in the arm when the government reduced the tariff value by 20 per cent, giving the brass units the necessary relief to withstand the recession.

The Central Board of Excise and Customs (CBEC), Department of Revenue reduced the tariff value by $806 (about Rs 40,000) per tonne to $2,446 (about Rs 120,000) per tone, from the earlier $3,252 (about Rs 160,000) per tonne.

“The tariff value is now at a better level for the industry. The production cost has also come down, as brass scrap prices have eased from Rs 260-270 per kg to Rs 195-200 per kg during the past six months. During the festive season of Diwali, we had roughly 35 per cent of orders in hand. However, after January, the order book has increased from 35 per cent to 70 per cent of what it was last year,” said Ramjibhai Patel, president of the Jamnagar Factory Owners Association (JFOA).

Patel said that the industry was still worried about the export scenario.

“As compared to last year, currently, exports are just 20 per cent. Jamnagar registers exports worth Rs 500-600 crore every year, but this year it is expected to be only Rs 150-200 crore,” he added. Similarly, the downturn has also affected imports of brass scrap.

The daily average import volume has fallen from around 200 tonnes to 100-125 tonnes. Also, dozens of brass factories have cut their production by nearly 50 per cent.

The total brass scrap business in the country has dipped to 40 per cent during the slowdown, said Patel.

“Nevertheless, in the coming days, the situation is going to improve as fresh demand is getting generated in the domestic market. We are hopeful of doing better business in the coming days,” he added.