Orissa a role model but for its captive mineral policy

Bhubaneswar | Updated: Nov 14 2005, 06:05am hrs
Orissas policy on value addition to its iron ore and chrome ore reserves is considered to be the most controversial interstate trade restriction in recent times. But it has helped the state attract Rs 1,33,656 crore investment in the iron ore sector alone. The state has signed as many as 43 MoUs with a total steel production capacity of 58.04 million tonne.

Industry bodies consider it as a restrictive trade practice. According to them, the state is virtually forcing promoters to locate their projects in the state.

Orissas captive policy will cause trouble for steel plants put up in other parts of the country with the expectation of free movement of iron ore, according to industries bodies.

Promoters of many ferro alloys industries plan to relocate their plants in Orissa, as the state has the monopoly reserve of 98% of the countrys chromite deposits.

MV Rao, president of Utkal Chamber of Commerce and Industries (UCCI), one of the largest trade and industry association in Orissa, welcomes the policy. But, he says, the state government should also consider the raw material requirement of the steel and ferro alloys plants that came up in the other parts of the country, before the captive policy was announced.

Except for the restriction in mineral sector, Orissa is an ideal place for trade and industries, says SC Bhadra, head, CIIs finance and tax cell, Orissa chapter.

Orissa levies the entry tax in lieu of octroi unlike many other states, where both are levied, says PK Biswal, a senior official of the state finance department. He adds that the entry tax is on the lower side, with a maximum rate of 2%.

The only duty on inter state trade is the central sales tax (CST). Here, the rate is as low as 1% for re-rolling mills and 2% for newsprint. The state has exempted Indian Oil Corporation from paying entry tax for 30 years on the sale of petroleum products produced from its proposed oil refinery project at Paradip, as an incentive to the project. Orissa does not earn anything from CST on petroleum products, as the state has no refinery. The exemption, therefore, brings no loss no gain for the state.

All restrictions on the movement of food grain have also been removed by the state, following the amendment of the Centres Essential Commodities Act.