'Link-Up With Lme Can Help'

Business Standard: How has the Union budget for 1997-98 been for your sector?

Jashubhai Mehta: In the budget 1997-98, the finance minister has not touched the non-ferrous metals industry.

There is no reduction of import duty on non-ferrous metals, but on the contrary, the custom duty on aluminium has been increased by 10 per cent to protect primary aluminium producers on account of the lower prices quoted at the London Metals Exchange.

This made aluminium quite competitive and cheaper to import resulting in heavy import leading to a dumping in the country.

The finance minister reduced the import duty on nickel and tin from 20 per cent to 10 per cent in the recent budget.

 

Other metals attract 30 per cent custom duty plus 2 per cent special custom duty plus 15 per cent CVD.

The non-ferrous metals market was not much affected due to the budget except aluminium.

Aluminium producers have increased their prices by 10 per cent which was equivalent to the increase in the custom duty in the budget and to compensate the LME prices as well.

BS: What is your opinion about the futures trading in non-ferrous metals in the country Should it be permitted and is there any benefit through it to the market?

J Mehta : In my opinion, the futures trading should be allowed in non-ferrous metals in India as it is very helpful to plan out production schedule, sales and purchase programmes of the future.

I assume that the government will not allow the futures trading following the foreign exchange restrictions.

For the futures trading, the convertibility of rupee is needed. The futures trading will prove very helpful to the market.

B S: Do you see any self-sufficiency being achieved in non-ferrous metals? If yes, which are they ?

J Mehta: In aluminium, we are not only self-sufficient but also in a position to export this metal. We are also achieving the production target of copper as two private parties are entering the market - they are Birla Copper and Midest Pvt Ltd. These parties will start their production very soon.

The latter one is going with the project along the lines of Sterlight Ind. which will help the country to push up towards the self-sufficiency. In zinc, we are far from self-sufficiency as the demand-supply gap widens because the government has restricted the import of its residue/ash/scheming under the pretext of environment hazards.

This has compelled 11 secondary producers to down their shutters which has outstretched demand over supply. We have to depend on the zinc imports to meet its demand.

In lead, we are more or less sufficient and as this metal being hazardous, the requirement for it has come down day by day. In nickel and tin, we are totally dependent on imports only. We do not have nickel and tin mines in the country.

BS : Should the Bombay Metal Exchange and the London Metal Exchange be linked up?

J Mehta: According to my opinion, both the Bombay Metal Exchange (BME) and the London Metal Exchange (LME) should be linked to one other because with this link, the manufacturers of metals can draw their futures planning which will help them in sales and marketing their products.

This will bring transparency in the non-ferrous metals market in the domestic as well as in the overseas market.

BS: What is the current non-ferrous market scenario in India as well as in the international market ?

J Mehta: On account of the world-wide recession, the demand for non-ferrous metals has gone drastically down and the volume of trade has become very thin.

The market is likely to come up somewhere during the middle of June.