Small industries feel left out

BUDGET REACTION

The Budget 2006-07 seems to have painted a rosy picture for industries in the city but the small scale units have many apprehensions regarding their future.

"There is no additional tax on sales and income tax hence the manufacturers are happy. This will also help industries increase the production. We expect the export to grow and result in profit," said Dinesh Parekh, president, Thane Belapur Industries Association (TBIA).

He added that power generation from the Dabhol plant is another big factor for the industries. The industries have welcomed the cut in customs and excise duty.

"Overall it is a good budget for industries. Reduction of import duty from 15 per cent to 12.5 per cent will boost the production as the industrialists can import more raw material," said Jayadevan K, joint secretary, TBIA.

"With excise duty being slashed, the production cost will substantially go down and the industrial units will be able to face the highly competitive market," he added.

However, the owners of the small scale units feel the budget has not done justice to them. They said that SSIs contribute 40 per cent of the GDP, offer 60 per cent of the total jobs in the country and contribute 40 per cent of the annual export.

"Small scale industries have been ignored. Nothing has been done on central excise front. Small units need exemption from central sales tax (CST). They have been demanding increase in the exemption limit from the current Rs 1 crore to Rs 2 crore," said Anil Ambardekar, secretary, Vasai Industries Association (VIA).

Industries having an annual turnover exceeding Rs 1 crore are being charged CST. "The input costs are increasing day by day because of which the annual turnover is also increasing irrespective of the increase in the production. So the exemption limit needs to be enhanced," he added.

Ambardekar doubted the purpose of slashing the import duty. "With custom duty being cut, there will be intense competition among the local manufacturers. Moreover, the cuts in the customs and the excise will affect the small scale units. We supply spare parts to the big players and we are afraid that they may not take our supply anymore," he said.

"It is an average Budget. The only consolation for the small and medium enterprises is lowering the credit guarantee fee from 2.5 per cent to 1 per cent," said Vijay G Kalantri, president, All India Association of Industries (AIAI).

Rakesh Pal Abrol, president, Bombay Small Scale Industries Association said, "Cut in the custom and excise duty on the automobile sector will affect the SSIs. Small units, which supply most of the spare parts to the auto companies will suffer."