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Friday, Dec 27, 2002

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Excise cut for AC, cold chain equipment sought

Neha Kaushik
Ashwini Phadnis

NEW DELHI, Dec. 26

IN a bid to place air-conditioners on a similar playing field as other consumer durables, the Refrigeration and Air-conditioning Manufacturers' Association (RAMA) has urged the Government to reduce excise duty on room air-conditioners from the existing 32 per cent to 24 per cent and finally to 16 per cent in two years' time.

The association has said that the excise structure for air-conditioners at 32 per cent is much higher than that for other white goods and home appliances which attract a duty of 16 per cent. "There is a distorted perception that the industry caters to the elite class which has translated into a higher incidence of taxation. Currently, the tax component is approximately 53 per cent of the maximum retail price," the association has said in its pre-Budget memorandum.

RAMA has also urged the Government to ease the abatement rate on air-conditioners from 40 per cent to 50 per cent in order to meet the post-manufacturing costs.

At present, the penetration level of air-conditioners in the domestic market is less than one per cent. India recorded sales of 0.7 million units as compared to 14 million in China in 2001.

Meanwhile, the association has also stressed the need to improve the cold chain network in the country, especially as about 30 per cent of the agriculture produce in the country goes waste due to poor storage conditions.

RAMA has said that in order to encourage more players to enter the market, the excise duty on cold chain equipment needs to be reduced to eight per cent from the current 16 per cent.

The association has also sought the implementation of the recommendations of the Prime Minister's Council on Trade and Industry which has called for awarding the industry a priority status, providing it a eight-year tax holiday by treating investment in cold chain as investment in infrastructure and allot land to cold chains at nominal rates.

RAMA has also urged the Government to refund excise duty on high humidity storage products, controlled atmosphere storage products and automation equipment for refrigeration systems. It has made the case that this should be done as they offer the latest technology for preservation and help cut down on wastage drastically.

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