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Gujarat: Duty hike on US items will boost domestic sales

The state is now emerging as a hub of auto and engineering of the country.

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The rise of duty on certain engineering products by the Union Ministry of Finance, following the duty hike by the US on certain Indian products, will encourage sales of domestic companies, say local players. Moreover, the duty hike is not specific to the US but applies to imports from all countries and will have a wide-ranging impact, they say.

Gujarat is a hub for engineering sector, especially after the entry of the likes of Tata Motors, Ford, Suzuki Motor Corporation and Honda Motors and Scooters India (HMSI). The state is now emerging as a hub of auto and engineering of the country.

"The finance ministry, last week, raised the import duty on a number of items, including certain engineering items, following the import duty hike by the US government on certain Indian exports. While duty hikes by the US and China are targetted at specific countries, those by India are general and not US specific, and therefore, will impact imports from all countries," said Amish Panchal, President of Indian Institute of Foundrymen (IIF).

Duty on most products has been hiked from 15 per cent to 25 per cent. These include forged steel rings for bearings of windmills, other articles of iron or steel, other cast articles of iron or steel, springs and leaves for springs or iron or steel, screws, bolts, nuts, rivets, cotters, washers, nuts, trunks, casks, drums, cans, containers, structures - pillars and shapes, sections, tubes, tubes or pipe fittings, couplings, elbows and fittings as well.

"This will make goods produced by domestic manufacturers more competitive and therefore encourage sales of domestic goods," Panchal told DNA.

Dinesh Daga, CMD of Shri Hans Alloys Ltd, said that the move will give local players a level playing field. "In other countries, especially China, finance, and energy costs are lower. While labour is cheaper in India, it is more efficient in other countries. Foreign producers have an advantage of economies of scale. All these factors make imports competitive. The hike in import duties will make local products more competitive," said Daga.

Players from Rajkot, a major centre for manufacturing engineering products say that the duty hike has come at a time when the demand is on a rise in the country. "Imports are already on a decline due to various regulations in China. Demand from auto, forging, industrial valves, and others are also on a rise, leading to increased sales by domestic producers. Import duty hike at this stage will give additional muscle to local producers," said Rajkot-based Vimal Monpara, Director of A-Cast Alloys.

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