No reprieve for struggling state industry

Ruchika M. Khanna

Tribune News Service

Chandigarh, February 28

The Union Budget proposals have got a mixed response from the state industry. While there is some relief for electrical and leather industry, the bicycle, steel and cottage industry is disappointed as no sops have been announced for them. The major industry in Punjab – steel, bicycle and bicycle parts, cottage industry (including most of sports goods) and textile industry — has not got any significant relief.

The only relief has been for the electrical goods manufacturers with import duty on electrical components being increased to 6 per cent. Besides, excise duty on leather goods (having an MRP of less than Rs 1,000) has been reduced from 12 to 6 per cent.

“This means the electrical component industry (mainly in Mohali and Ludhiana) and the leather goods (Jalandhar) industry will get a boost,” said RS Sachdeva, co chairman, Punjab committee of PHD Chamber.

Sanjeev Pahwa, chairman, CII Punjab State Council, said the proposal to increase infrastructure spending by Rs 70,000 crore in 2015-16 over last year was commendable. “The measure is significant for the land-locked northern region,” he said.

“The Budget proposals lay emphasis on ‘Make in India’. But other than showing the path in promoting entrepreneurship, there is nothing much for the small-scale industry. There are no tax concessions and no protectionism against cheap imports from China, Taiwan and Pakistan in the form of anti-dumping duty. We are disappointed,” said Ravinder Dheer, president, Khel Udyog Sangh. The sports goods, bicycle and bicycle parts and textile industry had been seeking reduction in central excise and imposition of anti-dumping duty.

Badish Jindal, president, Federation of Small Industries of India, said even though the government had said that there would be additional flow of advances to the industry, it had failed to clarify how banks would advance more loans at a time when corporate funding was at an all time low. “Punjab has over 15 lakh micro and small units, but the Centre has failed to take any decision on raising central excise exemption limit from Rs 1.50 crore to Rs 3 crore,” he said.

Worthless: Ludhiana industry

Ludhiana: The Budget has failed to impress the local industry that termed it “directionless”. “More emphasis has been given to the higher and lower strata of society. There is no relief for micro, small and medium enterprises. There is no change in income tax rates and central excise exemption limit. The central excise duty has been raised from 12.36 per cent to 12.50 per cent and service tax from 12.36 per cent to 14 per cent. This will further burden the MSMEs,” said Narinder Bhamra, president, Fasteners Manufacturers Association of India.

Gurmeet Kular, president, Federation of Industrial and Commercial Organsiation, said the increase in service tax would affect one and all. “No incentive has been announced for the MSME sector,” he said.

Ashok Juneja, president, Punjab Taxation Bar Association, said the association appreciated the Centre’s move to check black money, job creation through revival of growth and investment and promotion of domestic manufacturing. (Inputs by Manav Mander)

Case study

RM Khanna 

Managing Director, Stanley Engineering Private Limited

Manufacturer and supplier of defense components in Chandigarh; a former chairman of CII

Take on Budget: “The proposals are not only specific for this year, but also outline the vision of the government to give a boost to the manufacturing sector. The reduction in corporate tax from 30 to 25% means more foreign firms will set up manufacturing base here. In most ASEAN countries, the corporate tax is between 15 and 18%, which made these countries preferred manufacturing hubs. By reducing this tax, we open our doors to more investment, which translates to more job creation. 

By allowing 49% FDI in defence, the government has opened business opportunities for people like us. Manufacturing any engineering good in India is 30% cheaper than in western countries. I am partnering with a Detroit-based company for manufacturing a component, and with these new proposals, we will now set up the manufacturing unit here.

The ease of doing business will create a much better and corruption-free investment climate in the country.”