Ficci Calls For Cuts In Excise Duties

In a `memorandum on budget proposals, the chamber said that the duty on cigarettes should be lowered to reasonable levels to avoid a further shrinkage in its share in the tobacco sector. In India, cigarettes account for only 16 per cent of the total tobacco consumption, whereas the item represent approximately 90 per cent of the global tobacco consumption .

The central excise on non-filter cigarettes not exceeding 60 mm in length had gone up from Rs 60 to Rs 75 per thousand which works out to be 25 per cent. For other cigarettes, the increase works out to around 5 to 7.5 per cent. On non-filter cigarettes between 60 mm and 70 mm, duty goes from Rs 300 to Rs 315 per thousand.

 

Yet another matter which calls for attention is the levy of 10 per cent basic excise duty on cotton fabrics of the value above Rs 25 per square metre. This is too high as the Modvat credit available is much less than the final product duty. It is suggested that the rate of duty on cotton fabrics of value of more than Rs 25 per square metre be lowered, the chamber said.

The chemical industry is highly power intensive and the domestic cost of production depends heavily on the power tariffs. In the case of caustic soda, the energy cost accounts for 70 per cent of the cost of production.

Cost of power has gone up from Rs 1.30 per kwh in 1990 to Rs 2.54 per kwh in 1995, an increase of 14.5 per cent per annum compounded.

Cheaper imports have created major problems to domestic chlor-alkali industry because on one hand the imports are available at a lower duty and on the other the power tariff and other inputcosts are going up.

Further, due to the increase in the prices of petroleum products, cost of transportation by rail or road has gone up by 10 per cent. Also, there has been a significant fall in the international prices of chemicals. Duty reduction will make the imports still cheaper, the chamber said.