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Piling logs, liquidity crunch crush Kutch timber makers

Rajkot: Timber logs worth at least Rs 450 crore , which could have made at least three million wooden beds of standard size (6ft X 7ft), have piled up at the custom-bonded warehouses in Kutch as local importers are refraining from taking their stock due to severe liquidity crunch.

The importers, who own saw mills and plywood factories, have to pay 18% international GST (IGST) and 10% import duty on ready-to-use timber like swan timber and 5% on other varieties to get the goods released from the warehouses.



According to industry sources, nearly 2.5 lakh to three lakh cubic metre (cbm) timber unloaded from eight ships at Deendayal Port Trust (DPT), Kandla and Mundra Port has piled up in eight warehouses over the last two months.

Kandla alone accounts for 70% of India’s timber import and the processed wood is sold to various industries including building construction and furniture makers.

Navneet Bansal, a timber importer in Gandhidham, who has 900 cbm timber lying in the warehouse, says he has no money to pay duty and taxes to get his goods released. “Government collects IGST in advance, but doesn’t issue refund of GST in the prescribed time. Huge amount of refund is also held up with the government.” Timber is imported from New Zealand, Malaysia, African countries, Latin America, Uruguay and European countries.

President of Kandla Timber Association, Navneet Gujjar said, “We pay 25% amount of letter of credit (LC) to the bank over and above the IGST and import duty. We have to invest more then 50% amount before we start processing raw material. Ever since the lockdown was imposed, we have been facing liquidity crunch and have no money to get our goods released by paying this hefty amount.”

“We have repeatedly requested the government to reduce GST to 5% from 18% to save our industry,” said Gujjar, adding that the industry is saving the environment, and also that wood is not a luxury item.

Vice-president of Kandla Timber Association and also a customs house agent, Hemchandra Yadav said: “Stock of nearly 125 importers are piled up in the bonded warehouse. The importers get credit of 90 to 120 days to pay remaining purchase amount of imported goods to the bank. We fear that most of the importers will default that payment also.”

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