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CMAI on  2009-10 Budget expectations

N K Goyal
President, CMAI

India is well known for world’s highest monthly addition of telephones of the order of 10 Millions plus as also very huge demand for electronics. From roof top every body in the Government speaks to encourage local manufacturing, but the facts on ground are not much. In this background, let us see what ails the manufacturing sector and what can be expected in the budget from Government.

Firstly let us face the fact that it is a question of choice by the Government. Because of international pressures we have accepted ZERO DUTY in WTO for import of all electronics. There are certain issues within India for infrastructure, interest, comparatively no availability of financial assistance, dis harmony between Center and State Government policies, absence of continued sustained Government policy. Reluctance of States to come forward with more progressive and industrial policies, keeping revenue angle in view as also State politics. All this has resulted in almost negligible incentive for local manufacturing. There is also red tappism angle.

The basic question to be raised is” What is Central Government role to lay polices for indigenous manufacturing except for giving a license, when every other thing vests with States….land, local taxes, infrastructure, labor laws, electricity, power, roads, transporter associations, labor unions etc. etc.”

As it is Central Government policies are good and conducive, but action lies in implementation of polices and State level interventions.

Due to various reasons, whenever industry is established everybody starts demanding its pound of flesh…whether land, building, labor, power, municipal taxes etc. Whenever it comes to question of synergy with State Governments, the less said is better. It is left to the entire fantasy of the States to lay and prescribe rules and regulations for any and all things required for industries.

When we talk of budget, the usual answer is call for duties and taxes. Frankly speaking not much is required on that count, except a general demand for abolition of excise duty, sales tax, vat etc. etc.

We are not against tax concessions, but what we need more than is Government willing to bring parity in domestic taxes as a whole for manufacturing with other countries, with whom our industry has to face competition in this global economy and with whom our Government loudly goes on signing FTA and tax concession treaties. If not, then why?  Do we realize that the WETO/ITA/FTA etc. are for international trade, but are we overlooking domestic industry for the same? Pet come the reply, Government is opening up economy for you and the entire world market is at your door steps. Shamelessly we on saying that. What world market, when we cannot give the industry the same preferential treatment, same taxes, same speed of decision and same policy sustenance over a period of time. India Government is great every year the budget or even without budget we can tamper any concession or policy announced few months back. Then how can our industry compete globally.

So leave aside taxation, other factors like power and infrastructure requirements, speedy clearance of goods at customs, bottlenecks at port of call, mass of paper work, lack of skilled workers, encouragement of R&D, etc

Coming to encouragement in the present economic meltdown situation, the industry has suffered because of meltdown, increasing foreign exchange rates, cancellation of orders, loss of jobs. We always touch peripheries. Why cannot we abolish Excise Duty/ST for five years? Why cannot we free industry from inspectors for three-five years? Why cannot we give industry incentive for foreign exchange rates which have sky rocketed?

Sriperunbandar, Tamil Nadu is referred as Shenzhen of India and we always boost of the same to say proud Indian manufacturing. Come on, all the units there are majority foreign owned. Slightly come down and talk to them from core of hearts…they have several sufferings for airport, clearances, local State labor laws, access to Industrial Area, availability of power, cargo clearance, water, hospitals etc. etc.

You ask any thing from Government and it has a affect on revenue. Who is willing top forgo revenue. So we need real emphasis on local manufacturing and not getting lost up in revenue angle or revenue loss.

The entire world has seen Nano experience in West Bengal. What is our response? Let somebody answer who is responsible for manufacturing industry establishment and what was done in case of Nano? That gives the answer.

Coming to rural area development, one more phrase always on top of agenda of all the Governments and political parties, let us asks who is interested in removal of digital divide and promotion of rural areas. When it comes to taxes/duties, spectrum…we treat all equal. Why cannot we say No EXCISE DUTY and TAXES for rural areas? Why can not we say no licenses required for rural areas. Why can not we say No inspector for rural areas?  Also even after fifty years of independence we do not have a coordinated approach for rural development for power, water, roads municipal services etc.

So one word we want Action from Government.

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