The Bihar circle of the department of telecommunications (DoT) is hardly buying any cables from jelly-filled telephone cable units in the state owing to the high sales tax structure.

A jelly-filled cable manufacturer said that during 1998-99, the Bihar circle of DoT purchased cables worth Rs 58.77 crore, but the purchase from local units was worth only Rs 2.33 crore.

Due to the uncompetitive rate of local sales tax in Bihar, the jelly filled telephone cable units in the state are not able to compete with outside manufacturers. As a result, Bihar is also losing revenue as most of the cables are purchased from outside the state, the source said.

Similarly, in case of inter-state sales, the rate applicable in Bihar on jelly filled telephone cablesis 10 per cent, and four per cent if Form C is issued by the buyer. Mahanagar Telephone Nigam Ltd (MTNL), being a corporation, is unable to issue Form C, the manufacturer said.

To resolve the problem, many states have fixed the sales tax rate at four per cent for inter-state trade irrespective of Forms C/D. As a result, MTNL, like DoT, is buying most of its cables from units outside Bihar.

During 1998-99, out of the total MTNL purchase of jelly filled telephone cables amounting 52.08 LAC conductor kilometres (LCKm), only 1.59 LCKm cables was purchased from the units in Bihar.

The uncompetitive rates of sales tax may severely affect the future of this industry in Bihar as DoT is also planning to corporatise by the year 2001.

"The matter needs immediate attention for the survival of units in Bihar," the source said.

Meanwhile, the 6.25 LCKm cable division of Usha Beltron Ltd, which started operation in 1988 in Ranchi for manufacturing jelly filled telephone cables in collaboration with AEG Kabel ofWest Germany, is performing at its best despite all odds, a company source told The Financial Express.

During 1998-99 it sold 35.78 LCKm of jelly filled telephone cables against 29 LCKm sold in 1997-98, a 23 per cent increase.

Indian Cable Company in Jamshedpur, with an installed capacity of five LCKm, which was closed for a long time, is being revived by NRIs and FIs.