Gujarat industry seeks cheap power, end to octroi

With the interim Budget failing to offer much to Gujarat, the trade and industry community in the state has pinned its hopes on the state Budget.

The industry wants lower sales tax, uninterrupted power supply at a cheaper cost and the abolition of octroi in municipal corporation areas, when finance minister Vajubhai Vala presents the state Budget.

However, the industry is not too optimistic about these demands.

Interestingly, traders of the southern part of the state, under the banner of the Southern Gujarat Chamber of Commerce and Industry (SGCCI), want the state government to implement VAT on "an experimental basis" so that both the government and the industry can "get a feel" of the situation before proceeding on full implementation.

Amit Goradia, chairman, FICCI, Gujarat State Council, Western Region said, "Any announcement made by the state finance minister in his Budget should be aimed at strengthening the manufacturing sector in the state and making it globally competitive. At a time when the state is being projected as a leader in the manufacturing sector and a hub for foreign trade, the aim must be to make the manufacturing sector feel as comfortable as possible.''

"Reducing the transactional and additional costs like sales tax, octroi and stamp duty will only help the manufacturing sector," he added.

Gujarat Chamber of Commerce and Industry (GCCI), the apex body of trade and commerce in the state, has already held a half a dozen open house discussions on industry-related issues. GCCI will also submit a comprehensive list of demands and issues to the state government.

"Despite the extensive use of diesel engines in agriculture, the central government is not taking much interest in developing this industry. Moreover, there is a 100 per cent excise duty and eight per cent state sales tax imposed on this industry. The state government should take steps to reduce these taxes in the Budget," said Pravin Garala, president, Kutch-Saurashtra Federation of Trade and Commerce.

Diesel engine manufacturing units also want the government to step in and check the frequent hike in prices of pig iron and coal.

Machine Tools Manufacturers' Association president Rupesh Mehta said the 8 per cent sales tax applicable in the state is affecting the industry in an era of competition.

"In other states, the sales tax is four per cent. We expect the state government to bring down the rates in the forthcoming Budget," Mehta stated.

Dilip Mandlaywala, vice president of SGCCI, said a 45-point memorandum has been presented to Vala a couple of days ago.

"Different areas have been covered in the memorandum, but the major are reduction of sales tax on yarn from four per cent to two per cent, abolition of entry tax, professional tax and octroi and implementation of VAT on an experimental basis," Mandlaywala said.

Vijay Parmar, president of Rajkot Mandap Hirers and Electrical Association too are looking up to the state government to reduce sales tax.

The Rajkot Engineering Association wants the state government to increase amount of the assistance given small and small sector.

"The present assistance is just 10 per cent of the capital investment, but we want the government to increase it to at least 25 per cent," said Naresh Patel, president of the association.

In Jamnagar abolition of octroi and reduction of sales tax on brass parts are the main issues. Nathalal Mungra, president of Jamnagar Chamber of Commerce and Industry (JCCI) said the brass industry of Jamnagar has been facing problems of survival because of a high octroi.

"We have also been told that the government is considering abolition of octroi in municipal corporations that have octroi collection less than Rs 100 crore a year.

"We have asked for abolition of octroi in Jamnagar, Bhavnagar, Rajkot and Junagadh," Mungra said.