Customs duty cut will hit PSUs: Mysore firms

The proposed reduction in customs duty in the Union budget may burden the public sector enterprises exposing them to stiff competition. This could result in reduced returns on investments made by the government, the KIADB Area Manufacturers' Association (KIAMA) observed.

It said that the sectors likely to face stiff competition from MNCs will be oil and petroleum products, non-ferrous metals, consumer durables and synthetic fabrics.

While the budget proposes Rs 1,100 crore for rural electrification, the impact of this will be felt by a rise in demand for consumer durables, it is silent on power generation. Even as rural India is facing acute power shortage, electrification without power generation will only worsen the situation without giving the desired results.

The reason behind not framing a policy to attract FDI in power sector is not known, KIAMA general secretary K Ravindra Prabhu said.

The cess on petrol, and particularly on diesel, will overburden industries in general and SSIs in particular. SSIs use diesel for captive power generation. This will have adverse effect on prices of all commodities and freight rates. This will pushing up inflation.

The allocation for SSI development is meagre. Though a major contributor to exports and employment, a concrete policy to give a boost to the sector is lacking.

Proposal to attract investments for further expansion of the sector is also not mentioned. On the contrary, 108 items were taken off the SSI list exposing the SSIs to stiff competition from large and medium industries. This could be because of the WTO compulsions.

The finance minister has also not mentioned any incentives to expand the handloom sector which has the potential for generating employment on a large scale and earning foreign exchange on account of the removal of the quota regime by the USA, he said in a press release.