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Excise duty cripples tile industry

The nearly Rs 10 billion ceramic tile industry is crippling under heavy burden of excise duty coupled with the problem of over-capacity and sluggish real estate market.

According to members of the Indian Council for Ceramic Tiles and Sanitaryware, the irrational duty of 25 per cent for glazed ceramic tiles as against 15 per cent excise duty for all other ceramic products, including sanitaryware, was highly detrimental to the very survial of the industry.

They said the capacity utilisation of the industry was scaled down from 80 per cent to 1994-95 to 60 per cent in 1997-98 mainly due to weak demand of only 15 per cent induced by the slowdown in construction activity across the country.

ICCTAS chairman Vijay Aggarwal said several tiles manufacturing firms are running at very low capacity as compared to their installed capacity which resulted in manpower reduction.

Further, over Rs 10 billion have been invested in the last four years by various firms to increase their capacity in anticipation of revival of the construction market and now the huge capital is lying idle, Aggarwal said.

He urged the government to reduce the excise duty and bring it at par with other ceramic products so that the industry is in a position to reduce their prices in order to create demand for the ceramic tile products both for the local as well as export market.

UNI