Duty eva­sion de­flat­ing Pun­jab’s bi­cy­cle in­dus­try

The Northlines - - BUSINESS - Chandi­garh, Dec 07

Bi­cy­cle im­porters have found a unique way of cir­cum­vent­ing high cus­toms duty by bring­ing in parts of bi­cy­cles as spares from coun­tries like China and as­sem­ble them lo­cally and evade taxes to the tune of about 10%.

Bi­cy­cles in fully build-up con­di­tion at­tract ba­sic cus­toms duty of 30% while du­ties on parts are around 20%. In­dia im­ports bi­cy­cles from China, Cam­bo­dia, USA, Ger­many, Sri Lanka and Bangladesh.

“Some of the im­porters im­port com­plete bi­cy­cles in a knocked-down con­di­tion and show it as spare parts. Eva­sion of duty makes In­dian prod­ucts un­com­pet­i­tive and also hurts re­tail­ers who are tax­com­pli­ant,” said a Hoshiarpur-based im­porter, Ab­hishek Kashyap.

Some man­u­fac­tur­ers said, im­porters are also im­port­ing bi­cy­cles of other ori­gin coun­tries through Sri Lanka and Bangladesh route un­der South Asia

Free Trade Agree­ment (SAFTA) and evad­ing tax com­pletely.

“On an av­er­age, In­dia im­ports 50,000-70,000 bi­cy­cles per month from Sri Lanka. China-made prod­ucts are of­ten im­ported from Sri Lanka at zero duty by show­ing that the prod­uct is man­u­fac­tured in SAFTA coun­tries. This is hurt­ing Lud­hi­ana-based man­u­fac­tur­ers,” Vishiv­karma In­dus­tries Man­ag­ing Di­rec­tor Cha­ran­jit Singh said.

The to­tal turnover of the bi­cy­cle in­dus­try in Pun­jab is around Rs 5,000 crore. Im­por­tant play­ers in the mar­ket are Hero Cy­cles, Avon Cy­cles, TI and

Nee­lam Cy­cles. Pun­jab ac­counts for over 4,000 man­u­fac­tur­ing plants that em­ploy over 2.5 lakh peo­ple.

“The in­flux of as­sem­bled bi­cy­cles from China and other coun­tries by cir­cum­vent­ing the duty is ru­in­ing the do­mes­tic in­dus­try,” said Badish Jin­dal, an in­dus­tri­al­ist from Lud­hi­ana.

Cur­rently, In­dia pro­duces 18 mil­lion bi­cy­cles per an­num. Pun­jab ac­counts for 92% of the coun­try’s to­tal pro­duc­tion of bi­cy­cle parts and 75% of bi­cy­cle pro­duc­tion.

Nor­mally, the duty eva­sion is ram­pant in high pre­mium bi­cy­cles, which are priced be­tween Rs 15,000 and Rs 7 lakh. Cir­cum­vent­ing the tax has be­come a com­mon prac­tice by a large num­ber of im­porters that helps them cut the cost of the prod­ucts they im­port.

In­dus­try rep­re­sen­ta­tives also pointed out that some of un­scrupu­lous im­porters even got in­dulged in un­der in­voic­ing in order to neu­tralise the im­pact of cus­toms duty.

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