Anirudh Dhoot, President – CEAMA & Director, Videocon shares some Pre-Budget recommendations.
Recommendations on customs duties
Reduction of duty for LCD & LED TV panels <19” & inclusion of plasma panel:
· To favorably consider modifying the notification from “19 inches & above LCD/LED panels to “ LCD/LED & Plasma panels of all sizes”.
Import duty on set top box:
· Digitalization of TV will create huge demand for Set Top Boxes in the country and is likely to touch 20 M units per annum. This current demand is met by import. Indian manufacturers face huge disability factor as future demands will favor imports unless the playing field is leveled. The disability factor is in 12.5 per cent VAT applicable to Indian manufacturers as Cable & DTH operators do not provide them ‘C’ Form since they lease (and not sell) boxes. Further, importers do not pay any VAT. The Inverted Duty on Set Top Boxes is an additional hindrance.
· We strongly recommend Customs Duty on Set Top Boxes be increased to 10 per cent (currently five per cent) for at least two years, to encourage local manufacturing
SAD levied u/s 3 (5) of CTA be abolished:
· SAD levy may be removed as it does not generate any revenue for the Govt. For traders, SAD is exempted and for manufacturers CENVAT credit available. Moreover, this is adding to transaction cost of companies. Removal of SAD will not only result in cost saving for Industry but also manpower saving for the Government.
Duty reduction on project import from 5% to 0%:
· Customs Duty for R&D items should be 0 per cent to promote R&D in India, especially for Electronics, Air Conditioning and Refrigeration industry, where the growth potential is high. This will invite more R&D set-ups in addition to technological advancement and more innovative Indian products.
Duty concession on manufacturing ozone friendly products by Indian manufacturers:
· Customs duty relaxation ought to be allowed on Parts, Components and Spares for manufacturers who adopt Non-ODS technology in manufacturing. This will incentivize manufacturers who have to invest huge amounts to change technology from current practices to Ozone friendly ones and invite more Non-ODS technology in India, which could open up the markets for Exports.
Duty reduction on high technology machines and equipments imported by Indian manufacturers:
· Basic Duty on these items should be reduced to zero percent to promote new technology in India. This will also lead to innovative, high quality Indian products and open up export markets.
Recommendations on central excise
· Excise Duty should be brought to five per cent as this will provide a new lease of life to SME TV Units & CPTs manufacturers, thus avoiding large scale unemployment.
· CENVAT Credit in respect of Capital Goods received in factory in a given financial year is only 50 per cent and 50 per cent is deferred to next financial year, as per Rule 4 of CCR 2004. 100 per cent credit should be allowed Year one itself. This will help save transaction cost.
· Excise duty relaxation should be allowed on manufacturing of 5 star rated Air-conditioners & Refrigerators & their compressors ( 841430 & 841480), to five per cent. This will encourage manufacturing of more energy efficient products in India at a time when energy standards are undergoing a severe upward revision.
· Effective life of Capital Goods should be reduced to five years from current 10 years, at least for sector such as electronics, where technological changes are rapid. For removal of Capital goods as waste & scrap, CENVAT credit taken should be reduced by prescribed percentage or on transaction value whichever is higher as per Rule 3 (5A) of CCR Rule 2004.
· Either reverse mechanism should be removed OR partial reverse charge should be converted into full reverse charge to avoid the mistakes in huge business operations. This will lead to increased operational efficiency and correct tax remittances.
· Current exemption of SERVICE TAX ON SSI LIMIT OF 10 Lakh to small service provider is not available to service receivers in case of reverse charge methods. Exemption should be extended to service receivers also.
Concessional rate of interest on loan for purchase of consumer electronics & home appliances, particularly in rural areas
· Consumer Electronics and Home Appliances enhances the quality of life millions of households and contributes > Rs. 10,000 Crore to the Union & State exchequers. This sector is facing a slowdown in demand and hence underutilization of manufacturing capacity by ~ 50 per cent. High interest rates are one reason for slowdown of demand. RBI estimates a 20 per cent fall in consumer durable loans H1 of 2012-13. About 15 per cent of purchases of Consumer Durables (substantial part is in rural/small towns) are against financing by Banks/NBFCs. To ensure that the industrial units, particularly small and medium units, do not close down due to the sluggish demand thereby making thousands of people un-employed, there is a need to take steps for the revival of the industry.
· RECOMMENDATION: Since mass consumer durable products such as CRT TVs / small LCD TVs, washing machines and refrigerators are bought by lower middle income groups, interest on durable loans should be lowered to nine per cent, as a special case.