According to Metal Container Manufacturers' Association (MCMA) of India, the government's directive vide its notifications, no.57 (RE-93) 1997-2002 dated 10th December 1998, and No.35 (RE-98) 1997-2002 dated 11th Decmber 98, had been the root cause of the crisis faced by the industry today.

The notifications, though meant to provide succour to the Indian steel industry have also inadvertently brought in tinplate under its purview.

Prices of tinplate have been falling in the international market for some time now but the government notification sought to stipulate floor price of $720 per tonne for tinplate prime and $545 per tonne for tinplate secondary. These are very high compared with the average market prices of these commodities at $575 and $375, respectively.

The usage pattern of tinplate indicates that it is essentially a rawmaterial used for the packaging and should not form a part of the steel industry. Tinplate is primarily used for manufacturing metal containers for packaging puposes used mostly by the food processing industry.

Moreover as against the total requirement of 300,000 metric tonnes, domestic availability is hardly 100,000 metric tonnes. Only two companies in the country manufacture tinplate- Steel Authority of India Ltd. and Tinplate company of India Ltd. While SAIL normally supplies tinplate used for manufacturing 15 kilogram containers, TCIL does supply for lower quantity containers but the quality do not match the required specifications.

Most of the tin container user industry demand tinplate manufactured under continuous anneling process, the domestic suppliers manufacture tinplate using the batch anneling process.

According to Utsav Kapadia, manging director of Kaira Can Company TCIL supplies tinplate of thinnest gauge of 0.19 mm while international suppliers provide gauge as thin as 0.16 mm, thusgiving a cost and logistics benefit to the food processing industry.

Moreover tin cans face heavy competetion from plastics, PET and paper packaging products which have comparative cost advantage. It certainly does not compete steel in any way. Thus covering tinplate under the notification is not only unfair but also suffocating in nature to the industry.

If the notification is implemented for a longer period of time, the entire metal can manufacturing industry in the country will be wiped off which certainly will do no good to the domestic tinplate manufacturing industry as well.

The immediate fallout of this notification is that the industry is already reeling under acute scarcity of tinplate. Domestic suppliers are unable to fulfill the demand for tinplate required for metal can manufacturers for exports of packaged food products, especially the Rs. 250 crore mango exports.

Mango processors place orders for tins based on the size of the crop which normally is at a very short notice. Metal canmanufacturers will not be in a position to fulfill demand from the mango processors in the forthcoming season if they are not allowed to import tinplate at competetive rates from the international markets. This might create severe problems for the mango processsing industry as well, industry sources said.

According to Ashraf Chitalwal, director, Zarhak Steels Ltd, world wide recession has pulled down the tinplate prices in the international market severly. The ruling price of prime tinplate is $550-600 per tonne against the government's stipulated minimum price of $720 for importing tinplate.

According to informed sources, the government in its earnest to protect the domestic tinplate manufacturers from the world recession, it has not taken into consideration the price at which the domestic companies are exporting tinplate to other third world countries.

One of the domestic tinplate manufacturing company is believed to have entered into export contracts at the price of US $ 480-500 while the stipulatedbenchmark price for import of the tinplate is much higher.

MCMA has in a letter to the commece minister requested withdrawal of this hampering notifications. It has said in the letter that this notifications would sound a death knell for the Rs 1500 crore metal can industry employing 1,00,000 people and contributing Rs 375 crore to the goverment exchequer.