The government vide its circular dated November 1, 99 has revised downward the minimum CIF value for import of prime tinplate at $ 620 per tonne and for secondary tinplate at $465 per tonne, a hefty reduction of $100 in each type.

This will provide succour to the metal container manufacturers who were in dire state due to the government dictat prohibiting imports of tinplate below benchmarked CIF value.

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

THe notifications, though meant to provide soccour to the Indian steel industry had also inadvertently brought in tinplate under its purview. On one hand prices of tinplate had been falling in the international market whereas the government notification had stipulated floor price of $720 for tinplate prime and $545 for tinplate secondary, which was much higher than the average prices of these commodities at $575 and $375, respectively. The usage pattern of tinplate indicates that it is essentially a raw material used for the packaging and should not form a part of the steel industry. Tinplate is primarily used for manufacturing metal containers for packaging purposes used mostly by the food processing industry.

Moreover as against the total requirement of 3,00,000 tonnes, domestic availability is hardly 1,00,000 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.

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 was not only unfair but also suffocating in nature to the industry. The immediate fallout of the notification was that the industry, which was already reeling under acute scarcity of tinplate, domestic suppliers were 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.

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

MCMA had in a letter to the commerce minister requested withdrawal of this hampering notifications. It had 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 government exchequer.

As a result, union ministry of steel had, in April 99, agreed to find a solution to the impasse created by the December-notification issued by the the Director General of Foreign Trade (DGFT) fixing the floor price on tinplate imports.

In a meeting with the representatives of Metal Can Manufacturers Association (MCMA), the ministry had discussed the problems related to can manufacturing in light of the new floor prices on imports, release from the association had said.

Highlighting MCMA's discussion with the ministry chairman of Hindustan Tins Vijay Bhatia said the association had urged the ministry not to include tinplate as part of steel sector as the end use of tinplate is for the packaging industry. The association as an alternative to the impasse urged the ministry to fix floor price on prime tinplate imports only for customs duty purpose.