The demand by the small & medium enterprises (SMEs) to increase excise tax exemption limit to Rs 5 crore from the current Rs 1.5 crore is unlikely to be met even in the upcoming Budget.
According to official sources, ?An excise tax exemption limit of Rs 5 crore would give a fillip to development of SMEs. But, the finance ministry is unlikely to do so as it was increased to Rs 1.5 crore in 2007-08 Budget.? The government, in the previous Budget not only did extend the exemption limit for small scale industries (SSIs) from Rs 1 crore to Rs 1.5 crore, but also completely exempted manufacturing of biscuits whose retail sale price does not exceed Rs 50 per kilogram and all kinds of food mixes including instant mixes.
Besides, it reduced the excise duty on umbrellas and parts of footwear from 16% to 8%. However, at the same time as government has been continuously de-reserving items in small-scale sector.
The Centre has recently decided to exclude an additional 79 items from a list of 114 items, which only the small-scale sector can manufacture. With the recent de-reservation of items, the SSI sector would now have only 35 items reserved for it.
The government has been de-reserving items in a calibrated manner to increase competitiveness of the industry as well as facilitate adequate flow of credit & upgrade technology. In the last three years more than 500 items, which were earlier produced by the SSI sector only, has been de-reserved. While, 108 items were de-reserved in 2005, the number was 180 and 212 in 2006 and 2007 respectively. The Centre believes that de-reservation would enable the Indian industry to compete with imports, achieve economies of scale and create job opportunities.