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SMEs seek VAT reduction, licensing fee on raw material storage
March, 06th 2009

The small and medium industries in Orissa have sought reduction in licensing fee for the storage of raw materials, reduction of the value added tax (VAT) on items like tyres and bringing in uniformity in the rate of entry tax.

They have demanded that the state government should implement schemes for corporate restructuring instead of only focusing on the One Time Settlement (OTS) scheme of Orissa State Financial Corporation (OSFC) for the small entrepreneurs.

These issues were raised by the representatives of various associations of small and medium enterprises during the open house discussion in the entrepreneurship week organised by the Orissa government and Co-ordination Committee of Industries Association (CCIA).

Drawing the attention of the government to reduce the licensing fee for storage of raw-materials, Niranjan Mohanty, president, Utkal Chamber of Commerce and Industry (UCCI) said, the licensing fee has become prohibitive making the mineral based industries un-competitive.

The registration fee for storing minerals was raised to Rs 10,000 from Rs 5,000 last year. While it was increased to Rs 10,000 for coal and fireclay, it was increased to 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, was raised to Rs 20,000 for coal and fireclay and Rs 50,000 for minerals like iron ore, chromite, manganese and bauxite. The representatives of the industry pointed out that the manufacturing units like tyre making factories are subjected to pay 12.5 percent VAT compared 4 percent collected in the neighbouring states. The Orissa units are also paying 1 percent entry tax both on the raw materials procured locally and from outside. Besides, the finance department is yet to come out with notification allowing industries certain incentives as per the provisions of the Industrial Policy Resolution, 2008.

Earlier speaking on the occasion, Ashok Dalwai, secretary, steel and mines department said, with the withdrawal of the freight equalisation, the state has been able to take advantage of the natural advantage of rich natural resources. The state government has already provided stimulus to the industry in terms of MSME Development policy, restructuring of Orissa Small Scale Industries, and strengthening the state owned Industrial Promotion and Investment Corporation of Orissa. In the present context, response stimulation is the most important challenge.

Stating that the role of General Managers (GMs) is important in this phase, Dalwai said, they need to be imparted orientation training for successful implementation of the plan.

Industry secretary Saurava Garg said, apart from the OTS scheme implemented by the OSFC, more initiatives like the corporate restructuring will be required to tide over the crisis facing the industry. Time bound action will be required for executing various decisions, he added.

Responding to the issues raised by the entrepreneurs, Commissioner of Commercial Taxes (CCT), T K Pandey said, the state government has taken up the issue of differences in the rate of VAT among the states with the empowered committee of state finance ministers on VAT. In case of entry tax also, the industrial units can appeal to the authorities for redressal of grievances.

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