Wish list of different industries

Tea Industry

The tea industry expects the existing 1-rupee-per-kilogram excise duty on tea to be removed completely. Excise duty is a part of production cost for tea producers because it is levied at the point of clearance from factories.

Aerated Soft Drinks/Water industry
Aerated soft drinks falling under Central Excise Tariff sub-headings 2201.20 and 2202.20 are having excise duty of 16% plus Special Excise duty (SED) of 16% where as all other processed food and beverages are free from SED. Aerated beverages are mass consumption products as 90% of the consumption is accounted for by middle and lower income groups as per NCAER study. The high level of excise duty of 32% (ED+SED) is having adverse impact on this industry. High excise duty is also increased the incidence of spurious aerated soft drinks. Relief in SED in one go due to coinage problem and consequent price benefit to the consumer will help in stimulating volume growth.
Special Excise duty (SED) on aerated soft drinks/waters should be removed. Air Conditioners & Air Conditioning Equipment

In order to capture the growth potential a substantial reduction in price is required. The primary cause of the high prices is the high incidence of indirect taxes by way of excise duty and sales tax.

A 25% penetration of middle-high income households over the next five years is a potential 1.5 million-unit market from the household segment alone and with the developed markets of the world saturated, India offers tremendous potential. It would however, depend on the government to exploit it to the fullest.

A sustained GDP growth of over 5%, increased government spending and industrial activity, cheaper consumer credit etc. will drive the demand for AC products. However, a real boost in demand is expected only when excise duty rates are bought down from 32% to at par with other consumer durables i.e. 16%.

Room air conditioners were included under MRP based excise duty with an abatement of 40% in the Union budget of 2000-01 but the same is not sufficient in view of the high rate of excise duty of 32% (16% basic duty + special excise duty of 16%) and sales tax ranging between 12% to 21% besides entry tax/octroi in certain states.

Remove 16 percent SED on air conditioners and continue with an abatement of 40 percent.

Alcoholic Beverages

To meet WTO commitment, Basic customs duty on wines and spirits can be reduced as under:
2003 – 166%
2004 – 150%

As CVD has been levied in lieu of state excise duty, state governments should not levy any additional tax on imported liquor.

The bonded warehouse storage limit of one month without the payment of interest should be brought back to the earlier limit of 6 months.

A separate ITC(HS) clarification code should be created for whiskeys and other liquor covered under the main heading 2208.30 for bottled and bulk imports, so as to facilitate monitoring of the value and volume of imports.

The state governments should lift the restrictions on the sale of imported liquor.

Audio Cassettes and Compact Discs (CDs) / Entertainment Industry

Wants to continue with nil excise duty on pre-recorded audio cassettes.

Exempt excise duty on recorded audio compact discs.

Auto Components
India’s automotive component industry manufactures the entire range of parts required by the domestic automobile industry and currently employs about 2,50,000 persons. To meet international quality requirements and for tapping the global markets, the Indian auto ancillary units have entered into joint ventures with foreign companies.

But it wants customs duty on the following base materials required for manufacture of auto catalysts should be reduced to 5% i.e. at par with duty on catalytic converter.

The anomaly in customs duty structure in case of gaskets and its raw materials should be rectified by making the duty on both at least equal if not less.

Automobiles Industry

SED on passenger cars and multi-utility vehicles should be reduced from 16% to 8% in 2003-04 and to Nil in 2004-05.

Allow clearance of ambulance at the applicable concessional excise duty of 16% and the present system of paying full duty and claiming refund should be done away with. Also vehicles under CET heading 8702.10 and 8703.90 solely registered as ambulance by any buyer should be given the benefit of concessional excise duty of 16%

Customs duty concession of 5% on CNG kits/ parts of kits should be extended to raw materials required for manufacture of CNG kits and its parts.

To give boost to use of pollution free electrical vehicles, Customs duty on their major inputs should be reduced to 5%.

Body building activity by organised and unorganised sectors for the purpose of levy of Excise duty should be brought at par.

Exemption of SED on tyre, flap and tube should also be allowed for one stepney supplied with the vehicle.

Clarification should be issued that benefit of exemption of SED is available for tyres, flaps and tubes used in the manufacture of chassis.

Align excise classification of MUVs with that of customs classification.

Two-wheeler industry

The two-wheeler industry hopes the government will reduce the basic customs duty on auto components and steel sheets to 15-20% from 25-30% in the upcoming Budget for 2003-04 (April-March).

Demand for two-wheelers is expected to register a 20% growth in the current financial year to around 5.2 million units, mainly on account of a surge in demand for motorcycles.

The demand for motorcycles is likely to grow by 35% to around 3.98 million units largely because of a shift in consumer preferences and increase in exports.

Sales of scooters are likely to decline by around 6.3% to 0.86 million. Customers have shown preference for gearless scooters and scooterettes instead of geared scooters. Mopeds are likely to register a 20% decline in demand due to the shift in consumer preference.

The smaller companies are changing their product mix in favour of motorcycles, the report said. As a result of the increased competition, the pricing flexibility of two-wheeler manufacturers has declined. However, higher volumes and improving operating efficiency will help companies register an increase in their profitability in the current year.

Automotive Tyres

Tyre industry is essentially a raw material based industry and 60-70 percent of cost of production is accounted for by raw materials.

In case of steel tyre cord and polyester tyre cord, customs duty should be reduced from25% to 10%. For other inputs there should be a duty differential of 10% to encourage value addition.

Special Excise duty on all categories of tyres of passenger car/LCV/Tractor Front/Tractor Trailer should be reduced from 16% to 8%.

Either impose excise duty on tyres for animal drawn vehicles and hand carts so that manufacturers can avail CENVAT credit on inputs or alternatively allow availment of CENVAT credit on inputs and payment of 8% at the time of clearance.

Cement Industry
The cement industry has shown a phenomenal performance in the last two decades.

Customs duty on non-coking coal should be reduced from 25% to 15% i.e. the rate applicable prior to 12.05.2000.

Abatement on MRP of white cement may be increased from 35% to 50% subject to the need for it being proven by data on post manufacturing expenses, sales costs etc. Specific rate of excise duty on portland cement and cement clinkers should be continued. Concrete roads should be encouraged for construction of highways both at National as well as State level.

Ceramic Tiles

Ceramic tiles industry is labour intensive and essential part of construction industry. Being an eco-friendly product, the usage of ceramic tiles has increased to all places of house like living rooms, corridors etc. in addition to kitchen and bathrooms.

It is stressing that customs duty on inputs for ceramic tiles should be reduced from 25 - 30% to 20%.

Excise duty should be exempted when fly ash is used in manufacture of ceramic tiles.

Cigarettes Industry

The specific excise duty structure according to length of cigarettes should continue. The current length slabs should also be maintained at the same level.

AED on cigarettes at specific rates should continue even after implementation of VAT. Strengthen the checkposts on Nepal and Bangladesh borders to curb the entry of contraband cigarettes.

Consumer Electronics

Excise duty on B&W TV set should be based on MRP with an abatement of 40%.

There should be customs duty differential between CTV, Colour Picture Tube (CPT) and colour glass parts to encourage value addition.

Abatement for the purposes of excise on colour TVs should be increased from 35% to 40% subject to the need for it being proven by data on post manufacturing expenses, sales costs etc.

Cosmetics & Toiletries Status

Customs duty on industrial oils used in the manufacture of toilet soaps should be reduced to have a differential of 10%.

Customs duty on LAB (Tariff heading 3817.10) used for production of synthetic detergents should be reduced from 25% to 15%.

The abatement on MRP on soaps, detergents and scouring preparations should be enhanced from 35% at present to at least 40% subject to the need for it being proven by data on post manufacturing expenses, sale costs etc.

Suitable provision may be made to deal with grey imports of branded products.

Toothbrush and toothpowder should be dereserved from SSI.

The description at Sl. No. 146 of Notification No. 21/2002 should be amended to include 6.6 Polyamide (Nylon).

Defence Equipment & Military Stores

In order to provide a level playing field for Indian industry vis-a-vis foreign supplier, the price comparison should be based on landed price in India and customs duty added to the foreign product. Alternatively customs duty exemption should be removed on goods for which there is an indigenous supplier.

Price comparison in case of bids for PSUs and private sector should be on equal basis and price/purchase preference should be dispensed with.

Excise duty on parts captively consumed for the manufacture of items falling under heading 93.01 should be exempted.

Domestic Appliances

Characterised by a highly fragmented market domestic appliances covers a large variety of goods used in the household and includes pressure cookers, cooking appliances, vacuum cleaners, food processors, hair dryers, water/room heaters, washing machines and refrigerators.

The abatement on MRP for domestic appliances for the purpose of Excise be increased to 45% from 35-40% subject to the need for it being proven by data on post manufacturing expenses, sales costs etc.

Drugs and Pharmaceuticals

There should be customs duty differential between raw materials & drug intermediates, bulk drugs and drug formulations.

Reduce basic customs duty on diagnosis reagents / laboratory reagents falling under customs tariff heading 38.22 from 30% to 15%.

Delete Erythropoeitin from the list of items attracting concessional duty of 15% vide sl no 81 customs notification 21/2002.

Exempt chicken pox vaccine from customs duties.

The immunisation vaccines like Hepatitis A, Hepatitis B, Polio should fully exempted from customs duty.

Include the following bulk drugs and their formulations mentioned in list 1 of Central Excise Notification 7/2001 - sl no 47 for the purpose of excise duty exemption as these are used for treatment of HIV, AIDs, Cancer etc: Nevirapine, Atacuronium Besylate, Prazocin, Sodium Hyaluronidate, Somatostatin, Vecuronium Bromide, Octeotride, Amifostine, Diodium Pamidronate, Leuprolide, Cisplatin. Extend CENVAT credit on R&D equipment even if the research centre is outside the factory premises.

Extend CENVAT credit on inputs for medicines containing alcohol.

Edible Oils & Vanaspati

The sector has asked Centre to create Oil seed and Oil Development Fund.

Excise duty exemption on refined edible oils and vanaspati should continue.

Excise duty on by-products and residues arising out of manufacture of vanaspati and refined oil products should be withdrawn.

Fertilisers

The levy of 4% SAD on rock phosphate and sulphur should be withdrawn and the exemption available earlier should be restored to remove the anomaly.

Food Processing & Agro-Based Products/ Beverages

Food processing industry should be accorded special focus as a thrust area since it is employment elastic and has a great potential for exports.

Excise duty on food products attracting 16% excise duty should be reduced to 8% with CENVAT credit.

There should be no increase in excise duty on food products attracting Nil excise duty.

Excise duty on sugar boiled confectionery upto a retail price of Rs. 1/- should be reduced from 16% to 8%. Excise duty difference between “Branded” and “Unbranded” food products existing at present should be removed.

Products having abatement of 35% should be increased to 40% of the retail price after necessary review.

Abatement on ice cream for the purpose of excise duty may be increased from 45% to 50% after verification of data on post manufacturing expenses, sales costs etc.

Information Technology – Hardware

Excise duty on IT and IT related products (84.71 and 8473.30) should be reduced from 16% to 50% of CENVAT rate i.e-8%.

Medical Equipment

This year this sector has demanded that customs duties on select medical equipment like Spiral CT, X-Ray units, Defibrillator & ECG Machine, Patients Monitors, Surgical Instruments, Holter Analyser, TMT, Multi Parameter Monitors should be reduced by exempting CVD to bring at par with the duties prevalent before the 2002-03 budget.

Parts required for manufacture of spare parts for maintenance of medical equipment may be included in sl no. 94, 363, 366 & 367 of customs notification 21/2002.

Description of item No. 1 in list 40 of customs notification 21/2002 should be modified as “laparoscope”.

RF shield room materials for MRI, rate Nephelometry based diagnostic kits, automatic electronic blood cell counter, external defibrillator, head mounted surgical vision and device with mechanised zoom and bone densitometry equipment should be permitted at 5% duty by including these in list 37 of customs notification 21/2002.

Instead of using the words “Sodium Potassium Analyser”, the words “Electrolyte Analyser” should be used in item 66 list 37 of customs notification 21/2002 – sl no.363. Import of wheel chairs for handicapped people should be allowed at 5% customs duty instead of 15% duty at present. This item should be shifted from list 8 to list 37 of custom notification 17/2001-sl.no.348.

Import of medical software should be allowed at NIL Customs duty. Excise duty on medical furniture should be reduced from 16% to 8%.

Paper & Paper Products

They say that Budget 2003-04 should customs duty on pigments and binders used in the manufacture of paper should be reduced from 30/25% to 15%.

Plastic Articles

Reduce customs duty on inputs for plastic articles from present level of 30% to 20%.

Dereserve plastic products from SSI sector.

Steel

Supplies of Indian steel to projects / industries enjoying concessional duty under project import condition should be treated as deemed export so that the industry can avail of deemed export benefits.

Deemed export supplies should be granted DEPB benefits in lieu of Advance licence/drawback.

The customs duty differential of 5% between CR coils and HR coils should be maintained to encourage value addition.

The description in sl.no. 61 of customs notification 21/2002 may be amended to allow import of lime stone upto 1% silica content.

The basic Customs duty on the following critical inputs needs to be reduced to facilitate indigenous industry to become competitive. Deemed export status should be granted to coin blanks supplied to Indian mints to get refund of excise duty.

Introduce import unveillance mechanism for seconds/defectives. Impose additional customs duty of 16% on ships for breaking up.

Allow concessional rate of 8% excise duty for GC sheets.

Facility of paying excise duty at the ex-factory price on steel sold from stock-yards should be extended to all steel manufacturers. Also the benefit should be allowed if any subsequent operation are carried out in another plant of the same manufacturer in the same station.

Sugar

Continue with the present mechanism of regulated release of sugar in 2003-04.

Create a buffer stock of 2 million tonne of sugar out of Sugar Development Fund.

Encourage use of ethanol as a mixed fuel.

Government should procure sugar for the PDS or the Targeted PDS through an open tender.

Telecom equipment

Concessional customs duty of 5% as per sl. no. 239 to 242 of customs notification 21/2002 allowing import of equipment for telecom infrastructure should be continued.

Grant deemed export status to indigenous manufacturers of telecom equipment wherever duty on finished products has been reduced to 5%.

Import of switching apparatus mentioned at sl. No. 1(a) of list 22 of customs notification 21/2002 at concessional customs duty of 5% should be extended to Basic Service Operators.

Telecom software should be treated at par with computer/IT software and made eligible for NIL Customs duty.

Import of microwave equipment used for Access Backbone should also be allowed at 5% customs duty as applicable to MSC, BSC and BTS. Customs notification 21/2002 – sl no 239 should also cover spares as well as upgradation equipment for MSC, BSC and BTS.

Customs duty on cellular phones should be reduced from 10% to 5% with Nil SAD and exemption of CVD should be continued.

Customs duty on parts of static converters falling under tariff heading 8504.90 should be reduced to 15% to bring at par with the duty applicable on static converters for telecommunication. Textile Machinery

The word “parts” appearing in the description of sl.no. 250 and 251 of customs notification 21/2002 should be replaced by the word “inputs”.

The inputs falling outside chapter 72, 73 and 84 required by the textile machinery sector should also be allowed to be imported at same customs duty as applicable to the final product.

Rationalise basic excise duty on yarn (other than POY and PFY), woven and knitted fabrics, garments and textile made-ups at 8%. SED of 16% on polyester filament yarn (PFY) should be reduced to 8% in 2003-04 and to NIL in 2004-05.

AED levied in lieu of sales tax should be withdrawn and replaced by VAT concurrent with Sales Tax abolition or CST at zero rate.

ADE @ 15% under Additional Duties of Excise (Textile & Textile Articles) Act, 1978 should be scrapped.

Customs duty on cotton waste including yarn waste and garnetted stock (tariff heading 52.02) should be reduced from 15% to 10%.

Customs duty on raw wool of apparel grade and other fine animal hair should be reduced from 15% to 10%.

Customs duty on woolen / synthetic rags in completely mutilated form should be reduced from 25% to 10%.

SSI reservation for knitting sector should be completely withdrawn.

Wagons

Allow NIL excise duty benefit on bogies and couplers of wagons procured from any other manufacturer by making suitable provision in sl.no. 238 of Excise Notification 6/2002.