Additional export incentives are needed in the fourth quarter of fiscal to boost refined copper shipments and make domestic producers globally competitive, a paper by industry body Assocham has said.
The refined copper industry, in the past, has witnessed an overall higher production in the fourth quarter as compared to other quarters of the fiscal and the step was needed in order to make domestic refined copper producers competitive in the global scenario, the paper on the industry said.
"If significant boost is provided to exports in Q4 through additional incentives then it would help increase production, utilise incremental production for additional export volume and give the domestic producers a much needed level playing field," it said.
To protect market under deemed exports sales and explore avenues of export growth, the government should extend Incremental Export Incentivisation Scheme for 2014-15, Assocham said.
In the paper on 'Copper Industry's suggestions on Foreign Trade Policy & Procedures for 2014-19', Assocham has also appealed to extend full CST (central sales tax) exemption against H-form to manufacturers/OEMs under deemed export transaction where-in the import product undergoes value added fabrication before being exported.
Growing at a compounded annual growth rate of 25 per cent, steep rise in imports of refined copper products in India from about 65,000 ton in 2008-09 to about 130,000 ton in 2012-13 mainly due to 2 per cent central sales tax, has resulted in significant disadvantage for the domestic copper industry, it said.
"Despite domestic capacity being higher than domestic demand, the imports of refined copper products are likely to reach 202,000 ton in the current financial year 2013-14," it said.
Assocham said the empowered group on state-level value added tax (VAT) in January 2005 has emphasised the need for phasing out CST and CST rate was brought down from four per cent to three per cent from April 2007 and further to two per cent in April 2008 and has since stayed at the same level and further phase-out has been halted.
"CST, though a generic issue, hurts copper industry harder due to its thin margins in a conversion business model and just 2.5 per cent duty differential which gets nullified by two per cent CST," said D S Rawat, secretary general of Assocham.
In its paper, Assocham has also highlighted that Indian copper industry which is highly dependent upon China and rest of Asia needs to explore new markets to increase their export volume due to rampant slowdown and downward trend of copper consumption registered in China and Asia during the course of past three years.
