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Soda Ash: tax cuts may not help Indian flat glass industry

India“s reduction in the customs duty on soda ash from 35% to 20% in this year“s Budget would not bring about significant cost reduction to the domestic flat glass industry in real terms, according …

India“s reduction in the customs duty on soda ash from 35% to 20% in this year“s Budget would not bring about significant cost reduction to the domestic flat glass industry in real terms, according to Mr Alok Kumar Modi, Chairman of the All India Flat Glass Manufacturers“ Association (AIFGMA). “The reduction in customs duty on soda ash is a welcome step to the flat glass industry as it would help in checking the arbitrary price increases that soda ash manufacturers were resorting to in the past. It has not brought cost reduction in real terms,” Mr Modi told Business Line. Mr Modi pointed out that soda ash accounted for nearly 65% of the total raw material cost of the domestic flat glass manufacturers. He said that freight considerations and quality concerns sometimes deterred flat glass manufacturers from resorting to large scale direct imports of soda ash. All the members of AIFGMA had huge accumulated losses due to various reasons including slackening demand growth. “A 8% growth level is not enough for an industry which is currently saddled with over-capacity. The growth which was expected has not actually materialised,” Mr Modi claimed. Asked about the steps that need to be initiated both by the industry and the Government to turnaround the industry, he said, “We have to enhance the awareness levels and also educate the potential customers about the utility and safety aspects of our products.” He felt that the Government could also do some “hand-holding” to the industry at this difficult time by stipulating in building codes that commercial buildings should use only insulated glass. “Today, there are no standards in our building codes that require usage of insulated glass in commercial buildings,” he said. Mr Modi also said that more effort needs to be taken to promote tourism in the country. “Tourism is one of the important sectors that we have unfortunately neglected. If tourism is developed, there will be a need for more airports and hotels. This will help enhance demand for flat glass,” he stressed. On prospects for increased exports he maintained that it was important for the downstream processing segment of the industry to grow so that more value-added products can be exported. “Some of the taxes such as production taxes tend to force the processors to remain smaller. The high power cost blunts their competitiveness and discourages them from growing big,” he said. The total turnover of the 6 AIFGMA members stood at about Rs 900 crore. He placed the export turnover of these members at around Rs 100 crore.

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