Ferro alloy firms seek high duty to nip imports

The country's Rs 4,000 crore ferro alloys industry, reeling under acute supply surplus, has sought a rise in import duty to 10 per cent from the current 7.5 per cent in a bid to discourage cheap imports from neighbouring countries.

With the duty reduction to 7.5 per cent in February 2006, imports of ferro alloys logged a significant gain in the first half of this financial year at Rs 346.62 crore.

The imports of ferro alloys have increased as and when the basic customs duty has reduced. The imports were at Rs 263 crore in 2003-04 when the duty was cut to 20 per cent from the earlier 25 per cent. They grew to Rs 460 crore in 2004-05. Again in 2005-06, when the duty was slashed to 15 per cent, the imports surged to Rs 591 crore.

The customs duty was further reduced to 10 per cent in the same year.

"Any further duty reduction will hit domestic players' interest. To protect their interest the government should not at least reduce the customs duty any further, if it does not increase, in the forthcoming Budget," said R K Saraf, president, the Indian Ferro Alloy Producers' Association, a representative body of about 150 key organised players in the sector.

"This being power-intensive industry, the Centre should offer sops for its growth and protect the country from massive dumping. Compared with Re 1 a unit in South Africa, we are paying Rs 2-3 a unit, which is eating away our profits," he added. 

Size of the domestic industry (in mn tonne)
	Capacity	Production 2005-06	Capacity utilisation (%)
Manganese Alloys	1.40	0.87	62
Ferro Silicon	0.25	0.09	36
Chrome Alloys	0.80	0.66	82
Noble Alloys	0.25	0.02	80
Total	2.50	1.64	65

In a pre-Budget memorandum, the association has demanded the Centre to devise a mechanism for making funds available for the industry at low interest rates on a long-term re-payment basis. It has also sought allotment of coal linkages "� both to enable the industry to set up captive power plants.

Further, the association has proposed to the government to cut the customs duty on metallurgical coke to 'nil' from the present 5 per cent. It pleaded that the valued raw material for steel-making is not produced indigenously at all.