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Tuesday,18-January-2022

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Aluminium Industry reiterates urgency for 5% RoDTEP rate for economic sustainability

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Aluminium

The Aluminium Association of India (AAI) has pushed for speedy implementation of the RoDTEP Scheme (Remission of Duties or Taxes on Export Products) for the Indian Aluminium industry on priority to survive these challenging times.

In a letter to senior officials of ministries of Commerce & Industry and Finance & Corporate Affairs, AAI expressed the urgent need for at least 5% remission rate for the Aluminum Sector under RoDTEP Scheme to ensure its global competitiveness. The AAI also requested a separate budget allocation for the aluminium industry, being a strategic sector, to realize the immense potential to double Aluminium exports over the next 2-3 years.

Highlighting the urgency of the matter, the AAI said, the Government needs to notify the actual remission rates as per actual sectoral data submitted to the RoDTEP Committee. The inordinate delay in notifying the sector-wise remission rates is creating a precarious situation and a high level of uncertainty for the Indian exporters. It is adversely impacting exports due to ambiguity w.r.t. pricing of exports goods and absence of any clarity on the mechanism of duty remission/ drawback rates for exports. The situation for exporters further aggravates with the withdrawal of MEIS, as to date the exporters are unable to avail the MEIS benefit for exports already made during FY- 20 and FY- 21 (Apr-Dec) due to the blocking of the online MEIS module for applying claims.

The Commerce Ministry / DGFT are yet to notify the rates due to Government’s current situation pertaining to budgetary constraints. Union Budget 2021-22 has allocated only Rs 13,000 Cr for RoDTEP Scheme against Rs 50,000 Cr announced by Hon’ble Finance Minister in Sept, 2019. This allocation is just one-third of the Rs 39,097Cr allocated in FY-20 for MEIS (Merchandise Exports from India Scheme).

Supporting the rates calculated by RoDTEP by an extensive exercise conducted through detailed discussions, due diligence and analysis done for various sectors, AAI said that implementation of its rates will give flexibility in increasing the rate in the future based on budget allocation to increase exports without any objection from WTO.

Throwing light upon the current dilemma of the Indian Aluminium industry, it further highlights the plight of the Indian Aluminium exports struggling to retain competitiveness in international markets as compared to the major exporting countries, specially China, which extends various support measures for export competitiveness. In India, the high incidence of numerous unrebated Central & State taxes/ duties impedes the growth potential of Aluminium sector in India. The various taxes constitute ~15% of Aluminium production cost which is amongst highest in the world. This adversely impacts the sustainability & competitiveness of Aluminium industry and further renders Indian exporters vulnerable and uncompetitive vis-à-vis global players in international markets. These duties and taxes should not be exported as such and should be remitted back to the domestic producers to encourage domestic value addition and export of finished products.

Under MEIS, the Aluminium exports were eligible for a 2% reward rate which itself didn’t provide ample cushion to remain competitive against the current bearish market condition. Government support is extremely crucial at this juncture to reduce the burden of high taxes/ levies with an adequate remission rate of at least 5% under RoDTEP to boost exports and survive this challenging phase.

Recognized as one of the 12 champion sectors, India has the 2nd largest Aluminium production capacity (4.1 million tons/ annum) and is the 3rd largest Aluminium producer. Huge investments of Rs 1.2 Lakh crore ($20 billion) have been made to enhance domestic production capacity to cater to domestic demand as well as enhance exports of high quality finished Aluminium products. The industry has generated more than 8 lakh jobs and developed over 4000 SMEs in the downstream sector. Aluminium exports alone contributed $5 billion to India’s Forex earning in FY-21, i.e. ~2% of India’s export basket and have massive potential to double the exports to the tune of $10 billion Forex earning in future.

Business

Tata Motors to raise passenger vehicle prices

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Automobile manufacturer Tata Motors will marginally increase the price of its passenger vehicles from Wednesday (January 19).

According to the company, there will be an average increase of 0.9 per cent, depending on the variant and model.

“At the same time, the company has also taken a reduction of up to Rs 10,000 on specific variants, in response to feedback from customers.

“While the company is absorbing a significant portion of the increased costs, the steep rise in overall input costs has compelled it to pass on some proportion through this minimal price hike.”

Additionally, the company has decided to offer ‘price protection’ on Tata cars booked on or before January 18.

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Business

GST hike deferment, PLI make textile stocks’ attractive, several Cos shares double

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Shares in textile business have witnessed a consistent uptick in the recent months due to various policy measures and on hopes of a firm outlook for the sector going ahead.

Besides, the GST council’s recent move to defer rate hike on textiles has buoyed investors’ sentiment.

In its latest GST council meeting, it was unanimously decided to defer a hike in rates on textiles from 5 per cent to 12 per cent, which was to come into effect from January 1.

The matter will be discussed again in the next council meeting.

The deferment came as several states flagged higher tax rates on textile products to be put on hold.

The decision by the Council gave a breathing space to the industry.

Accordingly, stocks of several textile firms zoomed.

Till date, shares of Bhilwara Spinners, Nitin Spinners and Nahar Spinning Mills have seen a sharp rally.

The shares of Bhilwara Spinners, Nitin Spinners and Nahar Spinning Mills companies rose 252 per cent, 316 per cent, 711 per cent, respectively, over the past one-year period.

Notably, much of the rally in the textile stocks was due Centre’s production-linked incentive (PLI) schemes in the key manufacturing sectors, which included the textiles sector.

On September 8, 2021, the Union Cabinet had cleared the PLI scheme for the textile sector with an estimated budget outlay of Rs 10,683 crore.

The Centre, through the scheme, aims to provide a big fillip to the man-made fibres and technical textiles segments by promoting industries that invest in the production of some select textile categories.

Consequently, shares Of companies such as Alok Industries rose 40 per cent, Trident 333 per cent, KPR Mill 315 per cent, Arvind 195 per cent, Welspun India 134 per cent, Gokaldas Exports 344 per cent, Lux Industries 147 per cent, Filatex India 109 per cent, and Ambika Cotton Mills 105 per cent during the period.

In addition, analysts said that the stock price movement is likely to continue in the near future.

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Ford India closure: Compensation talks on with workers

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A couple of rounds of talks on the compensation to be paid to the workers have been held between the representatives of Ford India Private Ltd’s workers and the management, said a worker union leader.

He said the company management wants to conclude the talks and arrive at a settlement by February 2022.

“Couple of rounds of talks have been held with the workers in Chennai. We have given our charter of demands and the management said it has to be negotiated,” the Chennai plant union official told IANS preferring anonymity.

According to him, talks with the workers in the Gujarat plant have also started.

“We have asked for compensation for completed and remaining years of service. The company is not agreeable for the same. The management has not indicated as to the compensation they are willing to pay to the workers,” the union official said.

Majority of the workers are young and have about 25 years of service remaining before they retire and the compensation calculated on that basis will be a sizeable sum, is the management’s view.

However, the parent company will be infusing funds in dollars and as per the exchange rate between dollar and the rupee the outgo for Ford India will not be much, the worker leader said.

Last September, Ford India announced its decision to wind down vehicle assembly in Sanand in Gujarat by the fourth quarter of 2021, and vehicle and engine manufacturing in Chennai by the second quarter of 2022.

Ford India has four plants in the country — vehicle and engine plants in Chennai and Sanand.

Ford’s ‘quit India’ decision will result in an uncertain future for about 5,300 employees — workers and staff, the officials said last year.

The Chennai plant has about 2,700 associates (permanent workers) and about 600 staff.

“In Sanand, the number of workers will be about 2,000,” Sanand workers’ union General Secretary Nayan Kateshiya had told IANS.

Ford India had said more than 500 employees at the Sanand engine plant, which produces engines for export, and about 100 employees supporting parts distribution and customer service, also will continue to support Ford’s business in India.

According to Ford India, about 4,000 employees are expected to be affected by its decision.

The workers at Ford India want the prospective buyer of the car plants to hire them.

Meanwhile, Ford India has declared a holiday for majority workers till January 27.

About 100-200 workers have been asked to report for work to make the spares for the aftermarket, the union leader said.

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