Punjab traders want freight equalisation policy back

To compete with the manufacturers of other states, the Punjab Chamber of Small Exporters today demanded the re-implementation of the freight equalisation policy to give relief to the manufacturers of northern states because they were paying more freight charges than their counterparts in other states.

"Earlier, there was a freight equalisation policy in the country, but the policy was scrapped by the Union government in 1992 without any valid reason, forcing the industries of northern states to pay more for the freight to bring raw material up to their manufacturing units," Ashwani Kumar Kohli, senior vice-president, Punjab Chamber of Small Exporters, said.

After scrapping the policy, the manufacturers of Punjab were paying at least Rs 3 per kg more for bringing raw material and Rs 4 per kg more for sending the finished goods to other states, compared states in other regions.

Manufacturers from northern states were also paying more value-added tax on the finished goods, compared with the southern and western states, Kohli said.

He added that while manufacturers of cities like Chennai, Rajkot, Ahmedabad and Kolkata were paying only 50 paise per kg as freight charge on raw material Punjab was paying Rs 3.50 per kg.

In case the freight equalisation policy could not be revived, at least 5 per cent rebate should be given to the manufacturers of Punjab in income tax to provide interim relief, he said. Kohli preferred not to comment on how much Punjab's industry would benefit from the dedicated railway freight corridor.

The special tax incentives announced for the neighbouring states of Himachal Pradesh and Jammu and Kashmir was also affecting Punjab's industry, he added.

Because the special concession on the finished products of the neighbouring states had made Punjab's products less competitive. Several industries shifted its units to the neighbouring states to enjoy the benefits of the special policy.

He demanded that industry of the hilly areas of Punjab should be given be given the same tax incentives as those given to the neighbouring hilly states.

"As Punjab has suffered a lot due to decade long militancy and tension on Indo-Pak Border, the state's industry must be given some incentives to help it grow," he said.