Abolish CST: Cetma

In its pre-Budget recommendations to the finance and the information and technology ministries, Consumer Electronics and TV Manufacturers' Association (Cetma) has recommended the abolition of central sales tax (CST) on electronic goods and reduction of customs duty on finished products and components to boost manufacturing in the country.

The Cetma's contention is that CST has resulted in negative protection to domestic manufacturers, especially after the free trade agreement (FTA) with Thailand.

Under the FTA with Thailand, consumer electronics attract a 6.25 per cent duty which would become nil come September 2006. It has recommended that a special additional duty equivalent to CST be imposed on all imports, which could be modavatable, to provide a level-playing field to domestic manufacturers.

Commenting on the inverted duty structure, Mirc Electronics Ltd Chairman and Managing Director Gulu Mirchandani pointed out that components attract customs duty ranging from 0 to 15 per cent. There was no incentive to manufacture a product in the country if it was cheaper to import it, he said.

Companies in India have to shell out more than 30 per cent tax including 16 per cent excise duty, 4 per cent CST, 12.5 per cent vat/ sales tax and customs duty on imported components.

The industry body has recommended that customs duty on finished products and components be brought down to 10 and 5 per cent respectively.

Its other recommendations include an 8 per cent Cenvat on all electronic products including components and raw materials, imposition of 8 per cent Cenvat on set top boxes and abolition of excise exemptions granted to small-scale industries, states and regions.