Mumbai CD, VCD makers halt production over excise levy issue

Krishna Gopalan

Mumbai, Dec 9: It is crisis time for the Indian music/video industry as manufacturers of compact discs (CDs) and video compact discs (VCDs) in Mumbai have decided to stop production. This is in protest against the government’s decision to change the excise levy procedure.

Excise duty has till now been levied on the manufacturers only at the cost at which the CDs and VCDs are sold to the music/video companies. Under the new procedure, the levy will comprise marketing, advertising and royalty expenses incurred by the music companies as well. The manufacturers in Mumbai who have decided to stop production are Sagarika, Jet-Speed, Koch Rajes and Ananth.
Government officials could not be contacted on this issue.

“We cannot accept this valuation from the excise department and have been forced to stop production,” said Mr Ajit Bam, director, Sagarika Accoustronics. It is learnt that the manufacturers have been asked to pay close to Rs 150 crore in all as excise duties.

The manufacturers are part of a larger association — Indian Optical Disc Manufacturers Association (IODMA). Industry sources pointed out that the government’s decision is unwarranted since both the CD and VCD industries are still at a nascent stage.“Costs such as advertising and royalties are exclusive to the music companies and it is illogical to get the manufacturers to pay for this,” they said.

Mr Kumar Taurani, managing director, Tips Industries, believes the issue will be resolved amicably. “The shutdown will not last long since I expect the Indian music industry, the government and the excise department to sit together and resolve the issue,” he said.
Sources termed the decision “unfair”.

Mr Sushil Kumar Agrawal, managing director, Ultra Group, the owners of Warner’s and Universal’s film catalogue in India, agrees with this. “Piracy has already played havoc with the film and music industry and this is a bigger blow,” he said.