Industries associations of the state today demanded rationalisation of value added tax (VAT) levied on their finished products in Odisha.

The demand was put forth by a delegation, headed by the president of the Confederation Indian Industries (CII), Odisha chapter, M.K. Gupta, during their meeting with chief secretary J.K. Mohapatra today.

A delegation member said the state government was levying five per cent VAT on finished products manufactured by the micro, small and medium enterprises of the state.

However, in the neighbouring states of Bengal, Bihar and Andhra Pradesh, the VAT rate was consierably less at only two per cent.

“The Odisha government should either rationalise VAT at par with other states or hike the entry tax on the goods coming from other states. This will make the micro, small and medium enterprise products of the state competitive,” said a delegation member.

They also pushed for easier and simpler instalments for micro, small and medium enterprises for the payment of VAT.

The delegation members wanted the state government to ask heavy industries, state government departments, public sector units and private power distribution companies to purchase materials from the micro, small and medium enterprises of the state on a priority basis.

In turn, they offered quality service delivery and price at par with those offered in other states.

The industries also demanded the establishment of a multipurpose industrial estate in the state.

The CII state president said: “The state government showed positive response to our demands. The CII will submit a comparative statement on the VAT levied in other states. We hope the government will take a progressive decision.”

A state government official said the demands, including the VAT rationalisation, would be considered.

Steps would also be taken to ask the heavy industries, public sector undertakings and private companies to purchase the micro, small and medium enterprise products that are produced in the state.

The official also said the finance department had, on June 7, 2011, exempted VAT on the purchase of plants and machineries and raw materials used by the industries for five years under the Industrial Policy, 2007.

The state government also provided land at a subsidised rate for setting up industrial units under its industrial policy. Also, the state government gives several financial benefits including capital investment subsidy and interest subsidy for the establishment of micro, small and medium enterprise units, the official said.