Budget 2015: Ludhiana bicycle makers want rollback of central excise duty

CHANDIGARH: Ludhiana-based bicycle makers have sought withdrawal of 2 per cent central excise duty on bicycles in the upcoming Union Budget to provide much-needed fillip to the industry's growth.

The country's one of the oldest clusters has also sought intervention of the Centre in curbing the practice of importing "cheap" Chinese bicycles via countries such as Sri Lanka and Bangladesh by paying "lower" custom charges, saying cheap bicycles have posed serious threat to domestic bicycle industry.

"The Centre should understand that bicycle is a poor man's mode of transport and therefore, it should be made available at low prices. Moreover, bicycles are also environment friendly which should be promoted as much as we can," Gurmeet Singh Kular, President of Ludhiana based Federation of Industrial and Commercial Organisation said.

"We are demanding from the Centre to abolish 2 per cent central excise duty on bicycles to promote this industry," he said.

Bicycle makers pointed out that the imposition of 2 per cent excise duty had an adverse impact on bicycle sector, amid import of cheap import of Chinese bicycles.

The Centre had imposed one per cent central excise duty on bicycles in budget 2011-12 which was later enhanced to 2 per cent.

With Chinese bicycles making a serious dent on expansion and growth of domestic bicycle sector, the industry has also sought from Centre to take measures to check unhindered inflow of bicycles and parts through other countries.

"We have demanded that appropriate measures be taken to stop import of bicycles from other countries such as Sri Lanka and Bangladesh," he said.

Dubbing this practice as "escape route", industry insiders claim that some bicycle importers are importing cheap Chinese bicycles via other countries by "circumventing" the law, resulting into a blow to domestic bicycle makers.

Industry experts alleged that importers are misusing South Asia Free Trade Agreement ( SAFTA) by importing bicycles and parts from Sri Lanka, Bangladesh at lower amount of import duties.

Import duty on bicycle parts and components stands at 20 per cent and on fully built bicycles at 30 per cent.

Indian manufacturers are heavily dependent on China for several high-end bicycles and parts like basket, spoke, air-pumps, hub-cup, hub-kone, carrier, bicycle chain, handle bolt, brakes among other items.

Chinese bicycle parts are 15-20 per cent cheaper than items produced in India, they said.

Ludhiana, a major industrial hub, caters to country's over 90 per cent bicycle and its parts requirements and it houses prominent brands such as Hero Cycles, Avon Cycles.