Date:08/06/2004 URL: http://www.thehindubusinessline.com/2004/06/08/stories/2004060801200500.htm

Back Ministry rejects industry demand for refund of State-level levies

K.R. Srivats

Mr Dipak Chatterjee, Commerce Secretary.

New Delhi , June 7

THE Commerce Ministry has virtually rejected the industry demands for reimbursement of all State-level local levies through the existing duty neutralisation schemes of the Union Government.

The Ministry has also advised the industry to drive "attitudinal change" in the State governments for obtaining necessary labour law flexibility in the export-oriented units that are located in the domestic tariff area (DTA).

"I will certainly recommend to the Minister (Mr Kamal Nath) that he should not accept the demand for neutralisation of State-level levies. How can you (industry) expect the Centre to refund State-level duties? If the States come to know that the Centre is reimbursing their levies, they will only increase their duties," Mr Dipak Chatterjee, Commerce Secretary, told the members of the Federation of Indian Chambers of Commerce and Industry (FICCI) at an interactive session on Exim Policy here.

Industry representatives and certain exporters suggested that the Centre should neutralise incidence of all local levies such as octroi, entry tax, sales tax and even power charges through the duty neutralisation schemes such as the Duty Entitlement Pass Book (DEPB) scheme and drawback schemes.

On its demands for labour law flexibility in export-oriented units that are located in DTA, Mr Dipak Chatterjee urged industry to individually approach State governments and seek relaxation in labour laws.

He pointed out that the subject of labour was on the concurrent list of the Constitution.

Industry representatives argued that the provision of labour law flexibility would only create more employment. They, however, refrained from taking a call on whether such an increase in employment would be sustainable or only be seasonal.