GST gives a shot in the arm to personal weapons industry

10 Jul

NEW DELHI: GST has come out all guns blazing. Under the new tax regime, shotguns, rifles and bullets are cheaper, giving a shot in the arm to weapons dealers across the country as well as their high-profile customers.

“Big business houses, film industry and industrialists have been making queries. We are waiting for the ordnance factories to announce new prices,” Hanif Bandukwala, Mumbai-based dealer and retailer who owns Bansons said.

Security agencies and banks are other customers who will gain, apart from big farmers who use weapons to ward off stray animals from their fields and goons from their homes. Politicians are also among the people who may keep personal weapons.

While dealers like Bandukwala are likely to gain, dealers have a problem selling guns in the biggest potential market, Uttar Pradesh. The Allahabad High Court banned fresh licences four years ago because it turned out that the 2.15 lakh guns with the state police were heavily outnumbered by private licences that were more than 11lakh. The court said the state was sitting on a volcano.

Maharashtra are the biggest markets for the arms and ammunition industry which is around Rs 200-250 crore. It is growing 2% a year, according to the All India Arms Dealers Association that represents 4,000 dealers in the country. “Rifles and guns will be cheap by 9%, while prices of revolver and pistol will go up,” says Charan Pal Singh Ghei, chairman of the association.

Rifles, in which the barrel is grooved to make the bullet spin, and other shotguns account for 90% of the Indian market while smaller handguns make up the rest. Bandukwala said customers generally prefer Indian guns as new ones are generally available unlike foreign weapons that are mostly 10-20 years old.

Ghei said the popular 12-bore gun, which costs about Rs 20,000, will now sell for about Rs 18,000 while the 315-bore rifle will fall to about Rs 55,000 from the earlier price tag of up to Rs 60,000.

Under GST, the government has kept pistol, revolver under 28% tax slab and guns and rifles under 18%. “Earlier, we were paying 12.5% VAT, 2% central state tax and 12.5% sales tax for guns, revolvers, pistols and rifles,” informs Ghei.

Harjeet Bindra of Bindra Armoury in Bareilly district of Uttar Pradesh said that farmers in the hinterland of the state are the biggest buyers of arms.

“The law and order situation in these areas is so bad that it is not safe to venture out after sundown. With the police station far off, one can’t rely on their assistance and hence it is necessary to keep guns and rifles,” he said.

In UP, state taxes were the highest at 21% apart from the 12.5% VAT and 1% other taxes. Bindra added that the industry will benefit more if the government started issuing fresh licences.

Jodhpur-based New Light Art Works, which is one of the 100 private companies given licence by the government to manufacture guns, said that lower tax would encourage investment in the sector.

“Orders have slowed down since June as the industry was waiting for the new tax slabs. In a month, I sell 125-200 guns to arms dealers. Till date in July, I have sold 25 and expect a pickup in demand,” said 78-year-old Vijay Singh Bhati who sells guns under the ‘Om VSB’ brand.