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PRE BUDGET REPORTS

Dyes and pigments: Retain customs duty on dyestuffs at current levels

Industry expects that the import duties on dyestuff should be atleast retained to the present level to enable them to compete with the imported products

Current status

Dyestuff Industry has gone into a tremendous change during last ten years as manufacturing activities in European countries have been stopped due to the environmental & pollution problems. Today, the global market of dyestuffs, pigments and intermediates is around USD 25.85 Billion with dyestuffs and pigments market is approximately around USD 17.88 Billion and the intermediates is about USD 7.98 Billion. India's share in the global market is about 8 to 9%. China is the largest manufacturer of dyes followed by India.

The main user industry, namely, Textile, is growing well because of the increasing population on the one hand and improving standard of living on the other.

Industry expectations

The industry expects 0% duty on all types of fuels, low duty rate of 2% on basic building blocks like benzene, toluene, xylene, naphthalene etc.; moderate duty rate on Intermediates of 5% and high duty rate on finished products of 7.5%. This will encourage our industry to export value added finished products and import only basic products of low value.

GST to be implemented immediately

Expect clear cut guidelines be laid down to complete the procedures and formalities regarding refund of excise duty to exporters within a strict time frame including provision for payment of interest on late refunds

The industry expects that the import duties on dyestuff should be atleast retained to the present level to enable them to compete with the imported products.

Industry expects reinstatement of the exemption scheme, which has provided concessional rate of 60% of the normal rate of Central Excise Duty (CED) with Cenvat credit unto clearances of Rs. 1 crore (now withdrawn). The slab of the first clearance value of Rs.1.00 crore may be increased to Rs. 2.50 (crore). Also, for eligibility criteria, aggregate of value of Rs.4 crore in the previous financial year should be increased to Rs.5 crore.

The industry expects corporate income tax to be reduced to max. 30% and there should be no other surcharge and cess. Income Tax for individuals and others to be reduced to 25% max.

Analyst/Market expectations

Dyes and pigment sector is likely to be largely sidelined by the Union Budget 2012-13.

Stocks to watch

Atul, Sudarshan Chemicals, Kiri Industries

Outlook

Global dyes industry would grow at around 4%. Developed economies are expected to show slower rate of growth in consumption, especially in Europe and USA. However, the consumption in developing economies like China and India is expected to show a faster growth rate of 6.5% to 7%.

Presently India, China, Korea, Taiwan and Indonesia are the main Producer for the Dyestuffs and Pigments. Manufacturers in Europe & USA have almost shifted the production base to these Asian Countries. Main reason for this is the low cost of production and ample manpower within Asian Country.

Dyestuff Industry is mainly depending on the textile industry and presently most of the Asian Countries are encouraging their textile business, which used to be a core business once upon a time. Including India lot of incentives have been provided to the textile industries and presently all these textiles are being exported to Europe, USA and other Western Countries. So, definitely with the improved textile industry, Dyestuff Industry is bound to grow