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April 8, 2002 | 1120 IST
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Poor showing by industry: Ascon

BS Corporate Bureau

A survey by the Confederation of Indian Industry has revealed that out of 116 industries in the manufacturing sector, six have grown by more than 30 per cent in 2001-02, 15 by 10-20 per cent, 65 by 0-10 per cent. As many as 30 have shrunk.

The annual survey, conducted by the Associations Council, said the figures for the April-March period were still in the process of compilation. It said there were indications of a revival in some industries in the April-June 2002 quarter.

Half of the 12 services sectors reported growth, with at least three reporting over 20 per cent. Cellular services grew by 80 per cent, housing finance by 33 per cent, and software services by 30 per cent.

Construction recorded a 3 per cent growth in turnover. Six sectors recorded a decline. Leasing financial services declined by 8 per cent and air-cargo transportation by 3 per cent.

The chamber said the slow growth was mainly due to a slowdown in the automobile sector and slack production of basic goods, including crude, fertiliser, cold-rolled steel and consumer durables.

But some sectors have shown clear signs of revival and may pick up in the first quarter of the present fiscal, depending on the government's commitment to reforms, it said. The policy environment needed further streamlining for the growth of industry, it added.

The survey painted a grim picture of exports. Only five of the 48 export industries had excellent growth as against nine in the previous year. High growth was achieved by nine industries, compared to 11 in the previous year, while 34 industries registered moderate growth or shrunk.

The survey found the lacklustre performance in exports was due to the decline in foreign demand, a steep fall in global prices and lack of initiatives to address dumping by the US, China and the European countries.

On the streamlining of policies, the survey said: "The inverted duty structure and restructuring have put an added burden on some manufacturing industries.

The extension period for implementation of value-added tax to 2003-04 has also affected the business sentiment. Varying sales taxes in the states added to marketing costs."

The survey suggested the following: the structure of customs duties should encourage greater value addition, customs duties must never result in negative effective rates of protection, and tariff rationalisation should move with domestic reforms in infrastructure and the financial sector.

CII said the number of duty rates should be brought down to three common rates and five exceptional rates by 2004. Barring items that attract a low customs duty of 5 per cent, duties on others should be reduced.

The survey found many sectors had to face Chinese competition, free import under Indo-Nepal Treaty, competition from the unorganised sector and duplication of brands.

There was also the problem of manufacture and sale of spurious products at cheaper prices because of the absence of harmonisation of specification of standards.

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