Financial Daily from THE HINDU group of publications
Tuesday, Feb 14, 2006
Financial Daily from THE HINDU group of publications Tuesday, Feb 14, 2006 |
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Industry & Economy
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SSI AP: SSI units seek hike in turnover limit Our Bureau
Hyderabad , Feb 13 SSI units have appealed to the Centre to give total exemption of excise duty or hike the turnover limit from Rs 1 crore to at least Rs 5 crore, in the forthcoming Budget. Currently, SSI units which cross a turnover of Rs 1 crore attract 16 per cent duty plus VAT, in addition to the excise duty of 16 per cent plus sales tax already paid on raw materials. More than a million SSI units have remained stuck at Rs 1-crore turnover for the last five years. With increasing competition from Chinese goods, the units are under severe strain, said Mr P. Seshanjaneyulu, President of the Anantapur District Chamber of Commerce and Industry. In a release, he said that for SSI units, when the growth comes to a halt by reaching Rs 1 crore turnover, many entrepreneurs get frustrated and leave the sector to get into other businesses. Foreign companies, especially from China, are flooding the domestic market with electronics, hardware, toys, furniture, and other consumer goods; they also enjoy the benefit of no excise duty. In contrast, domestic units manufacturing the same items are subject to excise duty, he said. The issues of labour and raw materials are also impacting the SSIs badly. While materials costs are steadily going up, excess labour has become a problem. For example, five years ago, to achieve a turnover of Rs 1 crore the industry needed 50 labour and 50 tonnes of raw material. Today, at the escalated prices, only 25 tonnes will be sufficient to achieve the target. Hence, the lower consumption of raw materials automatically forces the unit to retrench 50 per cent of labour, the release said.
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