Govt. to allow tile imports with increased cess

• Cess on imported tiles to be increased to Rs.490 per SqM, from Rs.183
• Despite this substantial increase, importers still likely to make money

By Shabiya Ali Ahlam
The tile and bath ware importers will soon be able to let out a sigh of relief, with the government agreeing to lift the import ban in the coming months, however, on the condition that the cess tax will be increased by over twofold.

The manufacturers and importers of tiles and bath ware met with the Treasury last week to chart a win-win war forward for both segments and it has been agreed that the path to import will be opened, provided that the government receives higher revenue by way of tax.

“We all agreed for the opening of imports and to do so with a revision of the existing tax structure. The revision is only limited to increasing the minimum cess,” Tiles Managing Director Mahendra Jayasekera told Mirror Business.

Accordingly, the Rs.183 cess announced for the tile imports in the 2021 budget will be increased to Rs.490 per SqM.

During the meeting chaired by Treasury Secretary S.R. Attygalle, the manufacturers and importers have agreed to a ‘size-based’ cess, standardised to 15 percent.

In addition to increasing the contribution to government revenue, the new move was proposed to address a number of other issues prevailing in the industry, including the prevention of improper imports.

Jayasekara pointed out that the cess proposed in the 2021 budget was a downward revision from the previous tax structure.

Although the increase in cess is significant, he said the importers would still be able to push tiles (2 x 2 sized) within the range of Rs.700 to Rs.800, which is below the average price (Rs.1,200) of locally manufactured tiles in the market.  

Jayasekara admitted that the manufacturers did benefit from the import ban that was imposed to firm up the rupee against the US dollar, as the move allowed the local players to sell down the accumulated stocks.

“Before the COVID-19 breakout, we handover 10 months’ stocks and some of us were about to close down the factories temporarily. We were able to avert the situation with the import ban. Our profits were largely due to the selling down of the inventory,” he added.