The Hindu : Some relief for small-scale sector

Online edition of India's National Newspaper
Thursday, Aug 29, 2002

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Some relief for small-scale sector

By Our Special Correspondent

NEW DELHI AUG. 28. The Union Finance Minister, Jaswant Singh, today announced relief to selected items under the small-scale sector and restored the exemption limit of Rs 1 crore for ball and roller industries.

"We will take an encouraging and sympathetic view of the problems of small-scale industries (SSIs). We have set up a task force on both direct and indirect taxes and it would look into the problems. The recommendations will be of great help to the sector,'' Mr. Singh said at the annual SSI convention here.

Mr. Singh said the proposed value-added tax (VAT) system from April 2003 would benefit the sector and about 90 per cent of the work towards implementation of the system was over. As for the electronic toy industry, he said the demand for relief in sales tax would be considered after the VAT system became operational in all the States. And, for the hand-processing sectors, the pre-budget limits would be made effective immediately. In the last budget, the excise exemption on hand-processing was reduced to only three processes, scouring, hydro-extraction and calendaring.

The Minister also announced certain exemptions and relaxation of duty on bicycle parts and accessories which would come into force immediately. On a demand of the small-scale sector, Mr Singh said the Department of Company Affairs (DCA) was examining the feasibility of a limited partnership act, which would limit the liability of a partner in a SSI company to the equity only. Whenever a SSI company availed the facility of Central VAT (Cenvat), it had to pay at a concessional rate of 60 per cent of the credit. The Government had, in the past, announced relief on various accounts, including for technology upgradation while asking banks to step up credit to the sector without stressing on collaterals.

The Minister for Small-Scale Industries, Vasundhara Raje, said the sector was being "unfairly blamed and targeted'' on the excise issue. "The tinkering which is done each year with the SSI excise exemption scheme, such as taxing an item or reducing the limit to Rs. 25 lakhs, as in the case of ball bearings, actually results in a very marginal increase in the revenue, but creates much greater hurdles for the industry to encounter.'' There were 95,000 excise assessees in the country, of which about 4,000 accounted for 95 per cent of the total excise collections, Ms. Raje said, adding that the sector's plea to the Government was to ensure that excise exemption was available in the spirit in which it had been given.

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