The rest of the tractor industry has recommended that excise duty on tractors should be lowered to 8 per cent.

The existing rates are: tractors less than engine capacity 1800cc are Taxed at 8 per cent and those with more than 1800cc at 13 per cent.

The small tractor companies feel that by maintaining an excise differential between the two categories it would be beneficial to the small farmers as there would be a price advantage in the lower category tractors. Also, if two categories exist, there would not be a loss in revenue to the government.

The tractor industry has also suggested that the modvat credit on inputs which has been restricted to 95 per cent should be restored to the complete 100 per cent. According to the industry, "this has led to problems in the nature of increased unproductive paperwork on the excise authorities and manufacturers, leading to further delays and procedures". It also has a cascading effect on the final price of tractors.

Secondly, it is against the principle of ancillarisation which has increased with small industry units across the country which are feeding the tractor manufacturers with components and assemblies.

Thirdly, it penalises manufacturers who have plants at multiple locations with inter-plant transfer of materials, components and sub-assemblies. It does not make sense for the same product, a company chooses to have separate plants to manufacture components/sub-assemblies should have to incur a higher cost of materials than at integrated plant. Therefore, inter-plant transfers should be out of the purview of this provision.

The industry has also suggested that concessional rates of duty (at 60 per cent) for transfer of material between one unit to another of the same assessee for all components used as spare parts for vehicle manufacturers, should be extended to tractor companies.

The industry recorded around 3 per cent growth in sales for the first nine months of the current fiscal at 1,87,673 units.