Jamnagar brass industry hit by scorching prices

BRASS INDUSTRY: Vagaries of the international market have taken a toll on Jamnagar's small brass units.

Brass industry in Jamnagar is struggling to sustain itself in the face of fluctuating metal prices and currency in the the international markets and an increasing tax burden.

In last few years with scorching metal prices, several units in Jamnagar have had to shut down. "More than 500 units have shut down as the metal prices have shot out of our reach," says Ramnikbhai Shah a leading brass importer from Jamnagar.

"The present landing price of 1kg of brass is Rs 250 whereas local manufacturers cannot afford to pay more than Rs 200 per kg," says Shah. The brass used by the Jamnagar units is largely imported from Europe. This is due to the rising copper prices in the international market as brass prices normally move in tandem with copper prices, explains Shah. And if metal prices have sky-rocketed in the international market,fluctuating exchange rates have also affected business, adds Shah.

"Tax structure imposed by the government constitutes of 10 per cent import duty on the raw material, with 16 per cent countervailing duty, which is refundable, on which a special duty of four per cent is slammed and two per cent cess above all, but all this aggregates the landing cost of brass by Rs 51 per kg, so sustaining the long term trade is a matter of concern," says Amrut Shah, secretary of the Jamnagar Brass Parts Manufacturers' Association.

The only hope for the industry is some relaxation in the tax structure because a majority are small scale manufacturers and processing units who cannot take advantage of the government tax schemes, says Shah.

The traders are also demanding an intervention from the government in terms of providing centralised warehousing facility for brass imports.

"This business is the economic lifeline of Jamnagar and as the trade comprises of small players, it is important to see that it is sustainable. Everyone cannot afford to order a container of brass which costs nearly Rs 40 to Rs 45 lakh, but if the government were to provide a central warehousing facility and allow the us to procure the required raw material from there, only then can this trade be sustained on a long term basis," says Ramnik Shah.

"If this does not happen, then the cost of brass parts will compel other manufacturers to find substitute products of iron, aluminum, zinc, or plastic which is affordable to the end-user, says Shah.