Khanduri, Dhumal may tango for tax breaks

With a week to go before the Union Budget, Uttarakhand Chief Minister B C Khanduri today expressed the hope that the Centre would extend the 2003 tax holiday scheme by three years. With Himachal Pradesh, the other beneficiary of the scheme, Khanduri plans to launch a joint campaign to secure the extension.

"This is my long-standing demand that the industrial package should be extended till 2013 and my expectations are high from the Union Budget," Khanduri told Business Standard. Neighbouring Punjab has launched a campaign against the tax breaks, claiming revenue losses.

Khanduri said it was wrong to withdraw the tax incentives just because companies were setting up new units in Uttarakhand. "I want the Centre to examine the factual position before taking a stand," he said.

If the Centre withdraws the tax sops by 2010, as planned, it would adversely affect the new hill industrial policy announced recently by the state.

"I cannot give industries the benefit of central tax exemptions. So it is very important that the tax holiday scheme continues till 2013," Khanduri said. Otherwise, he said, companies may move out of Uttarakhand.

Khanduri pointed out that he had already urged Prime Minister Manmohan Singh to extend the package till 2013, a demand supported by the industry associations in Uttarakhand.

Khanduri said that he had raised the issue in the recent National Development Council meeting and also with the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia.

Khanduri said he would talk to his counterpart in Himachal Pradesh, Prem Kumar Dhumal, on the issue and launch a joint campaign in this respect. "Our concerns and Himachal's are very similar," he said.

Uttarakhand has seen an industrial boom of sorts after the special tax holiday scheme of January 2003 was announced. Leading companies like Tata Motors, Bajaj Auto, Nestle, Mahindra and Mahindra, Britannia and LG set up new units to take the benefits of the incentives.

Khanduri pointed out that former Prime Minister A B Vajpayee had announced the industrial package for Uttarakhand for 10 years.

But the United Progressive Alliance later curtailed the package to seven years. The need, he said, was to extend the package to cover 10 years.