High taxes may do in fan industry

Of the 200 units manufacturing fans (ceiling fans, air circulators, and table fans) in the city in the 1990s, only 15-20 are operational now, indicating that this industry is going towards extinction.

The reason for this is high taxes, coupled with the indifferent attitude of the government. The city was famous for manufacturing fans in the mid-nineties.

Speaking to Business Standard, Fan & Parts Association General Secretary Ravinder Singh said, "The step-motherly treatment of the state government towards this industry is responsible for the decline. It is a cottage industry, a fact not considered while levying taxes. They compare us with big firms like Usha and Orient Fans."

He said things start deteriorating in 2000, when the government imposed sales tax at a rate of 8.8 per cent on fans. The implementation of VAT at 12.5 per cent made it difficult for them to survive in the domestic market. Earlier, in the 1990s, sales tax was levied on fans at 4 per cent.

He said, "Sitting on locational disadvantage, we are already subjected to making huge payment towards freight, thus making input costs higher. Moreover, the imposition of 12.5 per cent tax on fans has made it difficult for us to survive in the domestic market. The scenario is such this industry. which was earlier restricted to Amritsar only, now has expanded to other states like Uttar Pradesh. Moreover, these states have an edge over us, because VAT is not implemented there".

He further added that the fan industry was an unorganised sector and that all jobs here were done manually. Moreover, these products catered for the lower strata of the society, so they should be low-priced.

But high-input costs and the 12.5 per cent VAT on fans has made the product costly, and further made it difficult for the small players to survive in the competitive market.

"This is a cottage industry, so we expect aids from the government, but till date no such aid has been granted. We have already met the Excise and Taxation Minister of Punjab Sardool Singh, but nothing has been done""either to revive the old closed units or to boost the existing ones.