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Run-up to the Budget: Paints
State of the industry (2000-01)
- Demand for paints is expected to increase by 9 per cent. Demand for decorative paints is expected to increase at 16-17 per cent. However, demand for industrial paint is expected to be adversely affected due to a slow-down in demand from the automobile sector.
- Supply is expected to remain stable, due to a marginal increase in capacity.
- Prices are expected to increase marginally, due to the stable demand-supply situation in the domestic market.
- The cost of production is expected to increase due to an expected increase of 9 per cent in the prices of titanium dioxide in 2000-01.
- In 2000-01, margins are expected to remain stable as the increase in prices is expected to be offset by an increase in raw material costs.
Industry expectations from the Union Budget (2001-02)
- A reduction in the basic customs duty: The Indian Paint Association has asked for a reduction in the basic customs duty on chemical raw material, from the existing rate of 35 per cent.
- Increase in the abatement rate: The Indian Paint Association has asked for an increase in the abatement rate for small-scale industry (SSI) units, to 40 per cent.
Tariffs
|
(per
cent) |
Customs
duty |
Excise
duty |
|
|
1999-2000 |
2000-01 |
1999-2000 |
2000-01 |
|
Paints |
38.5 |
44.0 |
16.0 |
16.0 |
|
Dyes |
38.5 |
44.0 |
16.0 |
16.0 |
|
Varnishes |
38.5 |
44.0 |
16.0 |
16.0 |
|
Inks |
38.5 |
44.0 |
16.0 |
16.0 |
|
Raw
materials |
|
|
|
|
|
Orthoxylene |
16.5 |
21.2 |
16.0 |
16.0 |
|
PAN |
38.5 |
44.0 |
16.0 |
16.0 |
|
Titanium
dioxide |
40.0 |
45.6 |
16.0 |
16.0 |
Notes
For 2000-01, the landed cost and customs duty include the SACD of 4 per cent, effective since 1999-2000. In 1999-2000, the SACD was applicable only for non-traders, and hence, has not been included in the customs duty.
Surcharge of 10 per cent on basic customs duty, levied in 1999-2000 Union Budget, has been included.
Source: Central Excise and Customs Tariff
Compiled by CRIS INFAC
Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.
Rediff-CRISIL Budget Impact Analysis
Budget 2001
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