Exporters and manufacturers of bicycle in Punjab and Haryana are demanding rollback of excise duty on local manufacturers and also pitching for imposition of anti-dumping duty on cycles imported from China.
Upset over bicycles brought under Central Excise net, the bicycle industry in both the states seeks intervention of Prime Minister Manmohan Singh and Union finance minister Pranab Mukherjee for the removal of the duty. They also asking for a meeting with both the leaders. The manufacturers also formed an action committee comprising brand manufacturers such as Hero Cycle, Avon Cycles, Atlas Cycles besides others bicycle parts manufacturers to put up their demands.
Ludhiana in Punjab and Sonepat in Haryana, country’s oldest bicycle clusters, accounts 90% of the total cycle production.
DS Chawla, president of United Cycle Manufacturers and Parts Association told FE that ?the association has sought meetings with the Prime Minister and the finance minister to resolve the issue pertaining to excise duty on bicycle and imposition of anti-dumping duty on Chinese imports. The excise duty will yield only about Rs 25 crore to the Centre but it would lead to unnecessary interference by another department which would lead to Inspector Raj?.
?The Association would be forced to resort to an agitation if its just demands are not met? Chawla added. Accoring to bicycle makers, with the levy of duty on bicycle, its rates will move up by R 50 to R 60 per bicycle. Inderjit Singh, president of Chamber of Industrial and Commercial Undertaking told FE that ?it was ironic that battery operated cars and bikes had been kept out of the preview of the excise duty but the eco-friendly bicycles have been burdened with excise duty?.
The cycle industry has also been demanding a steel price regulatory commission as ?volatile steel prices had proved to be a major deterrent to the growth because cartels work in steel industry and the prices of steel are fixed arbitrarily?. Price of steel pipes, HR coil, CRC sheet and wire rod that are used in cycles had shot up to 50% in the past few months. The bicycle manufacturers have been making a case for the government to impose an anti-dumping duty on imports of Chinese cycle parts to save domestic industry. There are about 4,600 bicycle manufacturing units in Punjab and Haryana. The cycle industry wants a 35% anti-dumping duty on cycle parts imported from China saying that the measure was necessary to offset the indirect subsidy that China offers to its industry by way of a fixed exchange rate. Bicycle manufacturers told FE that as against a cycle manufactured by domestic unit costing R1,000 a Chinese cycle costs not more than R700. Little doubt that local cycle traders have started preferring Chinese cycles to the local ones.
?While importing cycles from China one has to pay about R47,000 as freight charges for a full consignment but one has to pay about R90,000 if one gets a similar consignment from Ludhiana because shipment charges are almost half than the freight charges. In addition one has to pay local taxes on every cycle purchased from the domestic market?.