Withdraw excise duty on SSI-made branded goods

Updated: Jan 21 2002, 05:30am hrs
Although branded goods produced by small-scale industries (SSIs) in rural areas are exempted from excise duty, small units in the urban areas are not eligible for exemption. Moreover, exemption is also being provided for only a small number of branded goods.

I pointed out to the finance minister that there were a large number of cottage industries in urban areas which were managed by illiterate and semi-literate persons who were unable to maintain excise records. I requested him to withdraw excise duty on all branded goods produced by small units across the country.

I also requested the finance minister to increase the excise exemption limit for footwear from a maximum retail price (MRP) of Rs 125 per pair to Rs 250 per pair, keeping in mind the increase in input costs since 1998 when the exemption limit was last revised.

The deduction for abatement from MRP to arrive at the assessable value of footwear was reduced from 50 per cent to 40 per cent in 1998-99. This has adversely affected units which are already suffering due to increased competition from exports. I requested the finance minister to restore the deduction from MRP to the earlier level of 50 per cent to help the ailing industry.

Exemption from excise duty also needs to be provided to workers engaged in decoiling and cutting of hot-rolled and cold-rolled coils, iron and non-alloy steel into sheets. The decision of the Central Board of Excise and Customs classifying cutting of these metals as manufacturing activity and, therefore, eligible for levy of excise duty is not justified since it is actually a job work which gets exemption. Bringing this job work into the ambit of manufacturing had forced many such units to close down. I requested him to reclassify the activity as job work and give the workers their due.

According to the recommendation of the Raja Chelliah Committee, customs duty on raw materials should be lower than the final product to enable the domestic industry to survive. However, in the case of soles for footwear, the customs duty is 20 per cent plus 5 per cent whereas the customs duty on raw materials is 35 per cent plus a surcharge of 10 per cent.

Due to this anomaly, many units are lying idle despite the fact that huge investments had gone into them. I suggested that the government should review the custom duty on raw materials which may be brought down to 10 per cent.

I also requested the finance minister to cover plastic injection moulded footwear for concessional rate of duty of 5 per cent on import of machinery, moulds and accessories as is available to the leather industry.

There is an urgent need to provide this concession because due to rise in prices of leather and its limited availability, competition has increased in the synthetic material segment.

Countries like Taiwan, China and Korea are offering tough competition to Indian industry by supplying footwear made of synthetic leather material. The government can help the industry tackle competition by allowing concessional import of machinery.

(The writer is President, Federation of Delhi Small Industries Associations)