Exemption for units not using electricity favoured

Our Bureau

The industry directly employs about a lakh and indirectly around two lakh.

Chennai, March 6

The 16 per cent Central excise duty on hand made soaps announced in the Union Budget will affect small scale and tiny soap manufacturers and lead to closure of many units in rural areas, according to the Tamil Nadu Small Scale and Tiny Soap and Detergent Manufacturers Association.

The association urged the Finance Minister to provide excise duty exemption for soaps made without using electricity, the association's President, Mr V.S. Krishnan, told newspersons.

In Tamil Nadu there are about 285 member units annually manufacturing 20,000 tonnes of hand made soaps using non-edible oil, sodium silicate and caustic soda. The industry directly employs about a lakh and indirectly around two lakh. Nearly 40 per cent of these units manufacture soaps without the using electricity, and are located in villages, he said.

The excise duty levy would increase the cost by Rs 1.50 to Rs 2 for a hand made soap, which are mostly used in rural areas. Since there is no tax advantage in making hand made soaps it would be difficult for manufacturers to survive and compete with big companies. Some of the units would be forced to shut down or to switch over to mechanisation the latter would affect livelihood of many unskilled labourers in rural areas, he said.

To make 1,000 kg of hand made soap without electricity needs 30 labourers. And, to make the same quantity with power requires only five persons, but the power required was more than 400 kw, he said

(This article was published in the Business Line print edition dated March 7, 2006)
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