New Customs norms hit Jamnagar brass industry

The 50 year-old brass component manufacturing industry of Jamnagar, a 100 per cent import-oriented cluster, is facing closure due to shortage of imported raw materials.

A new clearance procedure for imported metal scrap announced by the Customs department has left the industry feeling the shortfall of raw materials.

"Jamnagar has almost 5,500 units, of which 700 units have already closed down in the last one month due to scarcity of scrap metal. If this will continue for another week, the industry in Jamnagar will shut down completely," Vijay Sheth, secretary, Jamnagar Chamber of Commerce and Industry (JCCI), told Business Standard.

After blasts occurred in various parts of India due to ammunition found in metal scrap, the Customs department has tightened norms for import of metal scrap. Earlier, the Customs had authorised a few agencies to certify contents of the scrap containers, but the new policy imposed by the Customs, demands a special inspection clause to be mentioned in every sales contract.

The clause requires every supplier to do a visual examination of the consignment and confirm that it does not contain any arms, ammunition, mines, shell, cartridges, radioactive material, contaminated or any other explosive material in any form.

"We made a representation to the government that the new clearance procedure may be followed only if the material is sent from a war zone, and the government is also not willing to differentiate between ferrous and non-ferrous metals. These clearance norms have created a huge problem for the industry. Almost 250 containers in the Kandla port are awaiting Customs clearance for the last one month. In this situation, the brass industry does not have sufficient raw materials to run for another two weeks," said G M Patel, proprietor, Atul Metal Industries, a leading manufacturer of various brass components.

Jamnagar brass metal industry contributes 90 per cent requirement of brass components in the country and has a major share in international market. While about 400 containers of non-ferrous metal scrap are imported per month at Jamnagar, not a single incident of explosion has taken place till date among these containers.

"During the last one month, we have lost 20,000 workers and cargo operators have also charged a fine of Rs one crore from the brass component industry. Several cargo operators have also cancelled agreements with us," said R K Sinha, partner of Metallic Industries, Jamnagar.

Vrajilal Kharecha of the Nawanagar Chamber of Commerce says that new Customs requirements, making physical verification mandatory for of each and every container, has also affected the volume of metal scrap that is sent to Jamnagar.

"Physically checking each and every container takes a lot of time and this results in lesser containers being sent. This problem has led to a shortage of raw material for since the last one month. We have got only about 20 to 30 containers of scrap metal in the last one month," he added.

"Representations have been made in this regard to the Customs authorities at Kandla port but the problem still persists. The officers end up raising objections on small issues such as change in address format in the pre-inspection certificate and a heavy amount is charged as fine. Such minor issues further add to the problem of the brass industry," said R K Shah of Jamnagar Brass Metal Association.