Orissa SMEs resent storage fee hike

Also say that difference in the rates of VAT and CST is making them un-competitive.

The small and medium enterprises (SMEs) of Orissa have expressed their resentment against the stiff increase in the registration and licence fee for storage of minerals. They have expressed apprehension that the hike is likely to affect the cost of production for mineral-based industries and may turn them un-competitive.

The registration fee for storing minerals was Rs 5,000 and it has been increased to Rs 10,000 for coal and fireclay and Rs 25,000 for minerals like chromite, iron ore, manganese and bauxite.

Similarly, the security deposit, or the licence fee, which was Rs 5,000 earlier, has been raised to Rs 20,000 for coal and fireclay. The same has been fixed at Rs 50,000 for minerals like iron ore, chromite, manganese and bauxite.

"The registration fee was fixed at Rs 5,000 earlier irrespective of the number of raw materials stored but the entrepreneurs are now paying registration fee at the revised rate for each and every item stored. It becomes difficult for the SMEs to sustain this cost", Niranjan Mohanty, president, Utkal Chamber of Commerce and Industry (UCCI) told Business Standard.

Further, what has complicated the issue is that units bringing raw materials from two locations will be required to obtain two licences. It is going to seriously affect the SMEs in the state.

UCCI, the industry body representing the small and the medium units of the state, has already given a memorandum to the Orissa government expressing its reservations on the issue.

The chamber has urged the state government to reduce the rate of value added tax (VAT) imposed on the materials manufactured within the state. Currently, the rate is as high as 12 per cent for a number of products compared to 2 percent Central Sales Tax (CST). So, the SME units of the state are unfavourably placed compared to outside suppliers.

Mohanty said that rural electrification works under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Biju Gramjyoti Yojana (BGY) is being taken up in different districts of the state.

Though it requires a lot of purchases, the local SMEs are not allowed a level playing field due to high rate of VAT. In this context, the chamber has suggested the government to remove the anomalies in the VAT. He said, 12 per cent VAT is imposed on items like electrical goods and aluminium products, whereas 3 percent CST is applied for the items imported from other states.

The difference in the rate of VAT and CST is going to make the price of the products of the local suppliers high", he said adding that the state government will gain more revenue by equalising the VAT rate with the CST rate. In this context, he urged the VAT rate on project purchases to be reduced.