Special Correspondent

All duty rates above the peak rate should be reviewed

NEW DELHI: The Confederation of Indian Industry (CII) on Tuesday asked the Central Government to reduce the peak customs duty in the budget for achieving 12 per cent growth in the manufacturing sector and a sustainable GDP growth rate of 8-9 per cent. In its pre-budget memorandum to the Finance Ministry, the confederation said the Government should follow the recommendations of the Kelkar Taskforce and reduce the peak duty below 15 per cent and push for further progress in internal reforms.

Despite the peak rate having been lowered to 15 per cent since March 2005, it pointed out, several product categories continue to attract significantly higher duty rates of 20-150 per cent. All duty rates above the peak rate should be reviewed and rationalised either unilaterally or as part of the ongoing WTO negotiations. Also the Value Added Tax (VAT) should be implemented in all States and Union territories while the Central Sales Tax (CST) should be reduced to 2 per cent from April 1, followed by its complete phasing out from April 1, 2007.

The CII further suggested that the Electricity Act should be implemented fully without amendments to help reduce cross subsidies in electricity supplies.

Free trade agreements (FTAs) should be signed only if the cost disadvantage being suffered by Indian manufacturers is eliminated by taking measures such as complete elimination of CST, imposition of uniform VAT on imported goods and undertaking labour reforms to allow greater flexibility in employment.

The customs duty on manufactured good should not be less than five per cent and the Government should remove anomalies in the customs duty structure where the inputs to a product attracted a higher duty than the product itself, the memorandum said.