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R.Y. Narayanan

Coimbatore , June 6

THE Southern India Engineering Manufacturers' Association (SIEMA), Coimbatore, has requested the Union Government to exempt some of the key raw materials required by the engineering industries from customs duty so as to ensure their availability and insulate them from wild fluctuation in price.

The association has also sought the early introduction of VAT, which it said would curb tax fraud, simplify the tax structure and lead to fiscal consolidation.

In a pre-Budget memorandum to the Finance Minister, Mr P. Chidambaram, the SIEMA President, Mr G. Rajendran, has also pleaded for extension of the current level of exemption of export income from Income-Tax, raising the personal income limit for levy of I-T at 30 per cent and for reducing I-T for companies. He said that the foundries in Coimbatore region were hit by periodic increase in the prices of raw materials and suggested that pig iron, cold rolled non-oriented electrical grade sheets and stainless steel sheets and rods be exempted from customs duty and wanted the anti-dumping duty on Chinese coke to be withdrawn.

In order to help the industries derive full financial benefit from investment in machinery to improve product quality, full CENVAT credit for capital goods should be permitted in the same financial year in which the investment is made.

Apart from asking for restoration of the pre-February 9, 2004 DEPB rates for engineering manufacturers to meet export target, Mr Rajendran wanted the water lifting pumps be exempted from Central Excise. The SIEMA President said that currently only goods imported by R&D departments of non-commercial organisations registered with the Department of Scientific and Industrial Research (DSIR) were exempted from customs duty and wanted this facility to be extended to all manufacturer-exporters without insisting on DSIR registration.

According to him, for computing the clearance value for the purpose of SSI exemption, clearance of exempted goods is also taken into account. But this pushes many units out of the purview of SSI classification.

He has sought that the exempted goods be excluded for arriving at the total clearance value.

Excise duty is sought to be levied on activities unrelated to manufacturing like handling and postage expenses. The SIEMA also wants implementation of the Kelkar Committee recommendation - that only those activities that have a bearing on manufacture of a product should be considered for levying excise duty.

Mr Rajendran said that the introduction of VAT would be helpful in ushering in a simplified tax system and help control fraudulent practices.

The input tax credit facility in VAT facilitates better compliance and helps in fiscal consolidation. Though VAT was slated for introduction more than a year back, it had not been done, he said, adding that it should be implemented soon. On direct taxes, he said that the earlier exemption of 100 per cent of export profit from I-T under Sec 80 HHC had been gradually reduced to 30 per cent, which would not be available from 2004-05. He has pleaded for continuing with this exemption.

The turnover limit of Rs 40 lakh for auditing of accounts of firms should be enhanced to Rs 1 crore. The income for levying 30 per cent I-T for individuals should be raised from Rs 1.5 lakh to Rs 5 lakh. The I-T rate for companies should be brought down from 35 per cent to 30 per cent and I-T surcharge for both categories should be removed.

Mr Rajendran also said that many industries were yet to feel the beneficial impact of soft interest rate regime. To meet their working capital requirements and as term loans, the SMEs would need financial assistance of Rs 25 lakh to Rs 2 crore and wanted the banks to be told to lend at PLR rates.

More Stories on : Industry Associations | Budget | Engineering

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