The ITMA, together with government-owned Steel Authority of India Ltd and Tinplate Company of India, has voiced strong opposition to the Metal Container Manufacturers Association's plea to the government that it revoke the floor prices for imports, especially for prime tinplate, on the ground that local makers cannot meet their demand.

The notification, issued in December 1998 by the director-general of foreign trade under the commerce ministry, set the minimum c.i.f. value of prime tinplate at $720 per tonne and that of seconds and defectives at $545.

Both Sail chairman Arvind Pande and Tinplate Co's managing director Bushen Raina had then welcomed the move, saying that it will protect domestic tinplate producers from dumping by foreign manufacturers.

Raina and a senior Sailofficial cited press reports that the steel ministry is considering a reduction of prime tinplate's floor price by $50 per tonne to $670 per tonne, and told The Financial Express that this would completely defeat the original purpose of the government to protect the domestic industry from dumping.

Unabated imports of non-prime tinplate, far in excess of the legitimate domestic requirement for such grades, has not only led to large-scale substitution of prime tinplate but is slowly destroying the domestic industry, which is operating at capacities of less than 35 per cent, they said.

Raina said Mumbai-based KRSU was forced to close down because of low capacity use, while Tinplate Co, an associate of Tata Iron & Steel Co, incurred a loss of Rs 61.18 crore in 1997-98. Tinplate Co has reported to the Board for Industrial & Financial Reconstruction as its net worth has eroded by more than 50 per cent during last five years.

Tinplate, or thin steel coated with tin, has a wide range of uses, frompackaging food products to bottle caps. Total domestic requirement of tinplate -- including prime and waste/waste -- is around 2,60,000 tonnes, which can be met by the combined production of Tinplate Co and Sail.

Sail's Rourkela Steel plant is using only around 20 per cent of its installed tinplate capacity of 1,50,000 tonnes, while Tinplate Co, which has set up a new cold rolling unit spending Rs 300 crore, is producing at about half its capacity of 1,10,000 tonnes.

Said Tata Steel's chief of coated products sales unit P Roy: "There is a very real fear that the concept of floor price will be overturned under pressure from the importers' lobby by creating a bogey that the level is high."

"The lobby is trying to get the import window for prime tinplates opened by getting the floor price concept changed and to use it only for the purpose of customs duty calculations," Roy said.

"If the government were to relax the floor prices provision on prime tinplate, the market will be flooded by imports of secondsand waste/waste misdeclared as prime tinplate with no one the wiser. The whole purpose of floor pricing would then be defeated, which appears to be the intention," Roy said.

ITMA director SN Mathur said import of non-prime tinplate, which accounts for 80 per cent of total tinplate imports, has increased five times compared to prime tinplates since tinplate had been shifted from the restricted list to open general licence list with effect from April 1, 1988.

"In 1994-95, when the government listed non-prime tinplate under OGL and imposed uniform import duty on both prime and non-prime tinplate, it opened the flood-gates for import of non-prime items," Mathur said.

He said large quantities of non-prime material are being imported at very low prices from the recession-hit countries of South East Asia and Brazil and are being increasingly used in the food packaging industry. This is one of the serious dangers facing Indian public health today.

The Sail official wondered why India is allowing import ofwaste/waste, and defectives when all other countries have banned their use. "In canning of non-food articles waste/ waste can be used, and for that India requires around 50,000-60,000 tonnes which can be met from indigenous sources. The import of non-prime items is, in fact, substituting the use of primes including in baby-food containers," he said.

Raina challenged the users' contention that the floor price of $720 per tonne (c.i.f.) is high, pointing out that can-makers imported prime tinplate in recent months at prices higher than the level fixed by the government.

According to the Steel Trade Intelligence Report of February 1999, tinplate users in the country have imported prime tinplate at c.i.f. value varying from $815 per tonne to $ 704 per tonne. But in most cases the prices were higher than the floor price.