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March 13, 2001
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Budget 2001: CII raises sectoral grievances

Rashmi Das

After hailing the Budget as a pathbreaking one, the Confederation of Indian Industry (CII), in an internal report given to the finance minister, has raised several sectoral grievances.

The sectoral impact survey, compiled on the basis of the reactions of the Association of Councils, says that while the budget shows the promise of stimulating growth and taking the economy back to 7 per cent GDP growth, many sectoral issues remain unaddressed.

The capital goods and engineering industry has registered its disappointment with the budget.

"The budget has provided no respite to the beleaguered capital goods sector which is in the grips of a slow down and is confronted with low import tariffs," the survey states.

Among the demands of the industry which have been ignored in the budget are, higher import duty for second hand plant and machinery, reduction of import duty for CNC systems and specific clarification on plant machinery embedded on earth.

The pharmaceutical sector has also stated that some of the key proposals have been neglected. The key issues which have been overlooked are one hundred per cent tax exemption for Intellectual Property Rights income, tax holiday for pharma companies having R&D as one of the main objectives, rationalising import duty exemption on drugs and tax exemptions for clinical and regulatory trials.

DS Brar, CEO and MD, Ranbaxy Laboratories, stated in the survey: "In-house R&D should have been given tax exemption at par with 100 per cent R&D companies."

The home appliances industry has said that the excise duty has not been reduced for the air conditioners and MRP abatement has also not been increased for refrigerators.

The tobacco industry, on the other hand, has said that the increase in excise duty burden on cigarettes and the consequent rise in prices may encourage smuggling. Excise duty will also plague the growth of the personal care and products, the survey notes.

Though the automobile sector has welcomed the budget, the industry has complained about the anomalies in the customs duty structure for auto components.

Further, the industry has said that the import duty on tractors should be raised to bound rates and customs duty on second hand tractors should be in line with the automobile sector.

Commenting on protection for the auto sector, Venu Srinivisan, CMD, TVS Suzuki said in the survey: "The auto sector has not been given enough protection considering the level to which China protects its auto sector."

CII has also argued for investment allowance to spur modernisation of existing units and undertaking expansion for the manufacturing sector, the survey notes.

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