The brass parts industry in Jamnagar is reeling under an uncertain pricing situation. The industry has witnessed steep rise in prices of brass scrap, which has risen from Rs 250 per kg to Rs 300 per kg in past five months.
The small players making brass parts have been finding it tough to bear the excessive burden of increased prices of brass scrap. "The high prices of brass scrap has restricted our growth. Volatile prices are not affordable for small players of the brass parts industry," said Ramjibhai Patel, president, Jamnagar Factory Owners' Association (JFOW).
The prices of brass scrap are based on copper prices, which has seen fluctuations on the London Metal Exchange (LME) in last five months. This caused brass scrap prices to rise by almost Rs 25-30 per kg to Rs 300-305 per kg.
"Brass scrap prices are based on copper prices on LME, so we cannot do anything to control it. But if government removes four per cent special additional duty (SAD), it would give a relief to the brass part manufacturers and the government tax burden will also get reduced," said Jinesh Shah, managing director, Rajhans Impexs Private Limited.
Echoing similar sentiments, Bharatbhai Dodhiya, secretary of JFOW found it necessary to reduce the tax burden on the industry to maintain the viability of the business.
"The only hope for the industry is to get some relaxation in tax structure since most of the units are small scale manufacturers and processing units. They cannot take advantage of the government tax schemes," said Dodhiya.
Jamnagar imports about 300 containers (each container weighing 25 tonnes) of brass scrap every month, on which the government levies five per cent customs duty, 10 per cent excise duty and four per cent SAD. However, SAD is refundable to the traders along with two per cent cess.
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As prices of brass scrap remains volatile, buyers of the end products are staying away from placing fresh orders. "The buyers of end products are not coming with new orders as there is uncertainty about the prices of end products due to volatile brass scrap prices. The industry will get some relief only when the prices stabilise," said Patel.
The industry insiders maintained that the rise in raw material prices had increased the production cost by around 20-25 per cent.