The recent one percent hike in excise duty on sports goods has dented one of India's biggest sports goods manufacturing industries based in Meerut. The industry players of the city lament that the hike will have a dreadful effect on the business.

Justifying the hike in service tax and excise duty by 2 percent, finance minister Pranab Mukherjee, during the Union Budget, had said it was a necessary move to ensure smoothen transition toward an all-encompassing goods and service tax (GST).

"The excise duty on sports goods has been increased from one percent to two percent which is an increase of 100 percent," said RK Jain, chairman of Indian Industries Association (IIA), Meerut. He added that owing to the rise sports goods will now be costlier thereby affecting the industry badly.

ON THE BACKFOOT

Mr Jain said that till now the total revenue generated from the excise duty on sports products was Rs 50 crore. "The hike in duty will double the revenue for the government, which is still a meagre amount. But it will surely increase the burden on the industry," he said.

"Though the increase in excise duty is not going to multiply the revenue of the government exponentially but it will have a negative effect on the growth of the industry," added Rakesh Kohli, chairman of Stag International, Meerut.

Mr Jain said that the industry is worth Rs 500-600 crore, which includes both exports and manufacturing. Europe, America and other cricket playing countries such as Sri Lanka, Australia, England and New Zealand are the main export destinations.

The levy of one percent excise duty on sports goods was introduced last year. ET had reported about the reactions of the industry players after the inclusion of sports goods industries under the ambit of excise department.

The decision drew flak from the industry players last year. The representatives had also visited the finance minister and the prime minister with their grievances and had requested for a roll-back. However, now, as the duties have been hiked further, the industry has expressed anguish over the decision.

ADDED PRESSURE

According to the players the inflow of Chinese goods into the market has been detrimental for the industry both domestically and in terms of exports as well. With further increase in the excise duty the industry will be dragged into deeper abyss.

"All the sports items will now attract the increased excise duty of 2 percent except sports gloves which attracts the levy of 12 percent despite falling into the category of sports goods," said Trilok Anand, president of All India Sports Goods and Manufacturers Association (AISGMA). He added that the rise of levy on sports gloves is also a major setback to the industry.