3-Yr Duty Structure For Cgs Sought

The Confederation of Indian Industry (CII) has urged the government to declare a three-year policy on customs and excise duties for capital goods outlining the actual rates for each year.

According to CII president Rajesh V Shah, the chamber has sought uniform rates of import tariff and excise duties across all product categories of capital goods. "At present, there is an ad-hoc approach, allowing zero duty import for new refineries and some other duty for some other industries. Can't we think of a single policy on import and excise duties and announce how the industry will be moving in the next three years? This will help the industry decide whether to make investments or upgrade technology now or wait," Shah said.

Opposing the different rates of excise and customs duties on capital goods meant for different segments, Shah said the "differential treatment has created different situations in different segments". According to him, the government's response to the proposal has been encouraging. The chamber will now prepare a detailed plan on the subject and submit it to the government. Shah, however, warned that the capital goods sector would continue to remain depressed for sometime as it has reached the end of a cycle.

"Revival of the capital goods sector depends on more new factories being set up. A lot of new capacity has already been created in various sectors, orders placed for which have been completed. We have thus reached the end of a cycle," he said. Shah pointed out that fresh investment was taking place in refineries, aluminium plants and ports. On the overall economic scenario, he said the industry continued to grapple with the question on how to boost demand and raise it to the level which prevailed three years ago, especially in key sectors like housing, commercial vehicles and railway wagons.

"Everything is not gloom and doom. But the mood is not positive, although CEOs of companies that are doing well will not share the sentiment," Shah said.