Industry bodies differ on VAT implementation

The Vijayawada Chamber of Commerce and Industry (VCCI) and the Andhra Pradesh Small Industries Association (APSIA) have taken divergent views on when value-added tax (VAT) regime should be ushered in.

VCCI president G Subba Rao said that the central and the state governments should not implement VAT in haste, while D Ramakrishna, the president of APSIA, demanded that VAT be implemented immediately.

Ramakrishna said that the implementation of VAT would protect honest traders who were suffering under the existing tax system.

Abdul Azeez, president of Automobile Technicians' Association, called for implementing VAT in its original form (single-point tax at the production point itself) without any amendments. "This would certainly liberate industrialists and traders from the menace of check posts, and usher in real free market," he said.

Subba Rao said that there were several issues that would make VAT implementation very difficult in Andhra Pradesh.

"Small traders cannot afford the cost of computerisation of accounts. Though some states agreed to adopt VAT, the Andhra Pradesh government should weigh pros and cons before taking a final decision on the VAT," he said.

Seeking an uniform rates of taxes throughout the country, Abdul Azeez said that the governments should implement the recommendations of Raja Chellappa Commission on taxes without delay.

Subba Rao said the state government should postpone the VAT issue for some more time and concentrate on other important issues.

Expressing concerns that both the state and the Centre might resort to heavy taxation to meet budget deficits, Subba Rao said: "Any new policy should inspire traders to pay taxes voluntarily."

He said that drought conditions that had been plaguing the coastal Andhra for the last three years, had played havoc with the trade and industries.

"Consumers lack purchasing power. Industries, based on past demands, have gone for over production. Consequently, scores of industries are drowned in heavy losses and closed. The government should help revive these units. The finance from banks is not easily available and small industries face difficulties in marketing their products," he explained.

On the issue of ensuring adequate marketing support, Ramakrishna mooted setting up of 'trade centres', separated from one another by a distance of 200 km, to provide marketing facilities for small industries.

"Permanent product exhibits of small industries should be kept at these centres. The industrialists should organise exhibitions frequently at these trade centres, offering customers all types of products under one roof. The previous state government accepted in principle to open such trade centres," he said.

He appealed to the state government to implement at the earliest the proposals for trade centres submitted by his association to help small industries survive.

He also said that the loan scheme to advance Rs 25 lakh to small industries without any collateral was not being implemented.

"The collateral demanded by the Andhra Pradesh State Finance Corporation has often crossed 125-150 per cent of the loan amount sought. No help of any sort is given to the medium size industries," he lamented.

The Andhra Pradesh Small Industries Association president said the exit policy for partners in a firm should be made easy.

"The present policy makes it difficult for partners to quit any company. To solve this problem, the government should set up micro stock exchanges where investors would decide the share value of a company. A maximum limit (Rs 5 crore) for trade in these exchanges might be fixed. This would make exit policy easy and transparent."

Ramakrishna also suggested that the government provide world-class common facilities for industrialists to develop prototypes of new products at affordable cost.

"Computer numerical machines will shorten the product development cycle to just two to three days at nominal expenses. These common facilities are very common in all the developed countries. A small country like Portugal has set up common prototype machine centres in every city," he pointed out.

Azeez appealed to the government to address the farmers' problems first as the development of trade and industries was totally dependent on agriculture.

The government should divert the Godavari river at Illendu and supply water to the parched lands of farmers in Krishna district, he said. He said a stone had been laid to lay an approach road to the new Autonagar at Kanur near the city three years ago.

"If this approach road is completed, the new Autonagar will start functioning and provide jobs to over 50,000 people. The road reduces traffic congestion on NH-5 and NH-9. The travelling distance will also come down by 10 km at least, which would save a lot of fuel and time. There would be scope to end frequent occurrence of road mishaps. The old Jawahar Autonagar, which provides direct and indirect jobs to over a lakh people, suffers from decades of neglect," he said.

He appealed to the state government to take up with the Centre the pending issue of the Rs 60-crore cluster development programme for Autonagar.