Exemptions: tax-breaks or tax brakes?

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: manufacturer in Uttar Pradesh can prove beyond doubt that his interest/competitiveness is severely affected due to the special advantage of exemption from CED, IT or concession in sales tax on input or finished goods being available to the exporter in Uttaranchal.

Imposing levies on the lines of anti-dumping duties under the WTO regime on the goods from states that resort to such policies is ingenious and theoretically sound, but seems difficult to implement.

Even in the WTO, the idea of anti-dumping is being criticised, for it has failed to achieve the desired results.

As a matter of fact, it has been used to propagate monopolistic behaviour by companies having greater muscle power. It has been misused tremendously even in India to further monopolies. When it comes to dispute resolution through complex laws and expensive legal procedures, it is unlikely that SMEs would be at an advantage.

However, that does not take away the crux that the present practice of granting ad hoc tax concessions borders on absurdity. On the one hand, we are drumming up the need to integrate the Indian markets by highlighting the need to have Vat and GS.

On the other, we are encouraging further fragmentation of the Indian market.

The right approach is what Dr Kelkar had suggested, that instead of exemptions based on location, “as a general policy, the targeted beneficiary may be assisted by upfront transparent budgetary support. Such an approach would ensure public debate and there would be no misuse of the exemption.”

As there is greater realisation of the adverse impact of such ad hoc concessions in central government, the least it could do is to take steps to put an end to the nuisance. It is high time now for the government to walk the talk.

Could you let us know about web sites relating to small-scale and medium industries. I plan to start a business and would like to gather as much information as possible.

— Arihant Jain

You may find the following sites useful in your research:

One, the Sido portal: www.smallindustryindia.com

Two, Network of Indian SMEs: www.smenetwork.net

Three, Federation of Indian Micro and Small & Medium Enterprises (Fisme): www.fisme.org.in

Four, Technology Innovation Management and Entrepreneurship Information Service: www.techno-preneur.net

And five, The National Small Industries Corporation: www.nsicindia.com

Anil Bhardwaj is former secretary-general, Fisme.