The Hindu : Business : CII's wish list in agriculture

Online edition of India's National Newspaper
Wednesday, Jun 30, 2004

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CII's wish list in agriculture

By Our Special Correspondent

NEW DELHI, JUNE 29. The Confederation of Indian Industry in its pre-budget memorandum has called for a slew of measures that will boost growth and productivity in the agricultural sector.

While asking the Centre to give States incentives to amend their Agriculture Produce Marketing Committee Acts (APMC Acts), the CII has suggested weighted income-tax deduction under Section 35(2AB) to corporate investments made in agricultural extension work, grant of benefits under Section 80(IA) to private sector investments in irrigation, water management, storage, transportation, information technology; and removal of the ceiling on agricultural interest rates

The apex chamber has also recommended reduction in excise duty on pesticides from 16 per cent to 8 per cent and extension of nil excise duty to all branded and processed products made from perishable goods (where the unbranded product is not subject to duty).

The CII is of the view that these proposals will help India's long-neglected agriculture sector to grow faster.

In the last years, it has grown at an average rate of 2.8 per cent only, and there is a need to step up growth in this sector to the region of 4.5 per cent. Only then will India's GDP growth cross 8 per cent, and rural income and rural employment increase.

At present, one of the constraints on greater agricultural development is the APMC Act of States.

The CII has suggested that the budget should set up a fund that gives an incentive to the State governments that amend the APMC Act in line with the model APMC Act. For instance, the current APMC Act of most States prohibits transactions outside the mandi system.

Even States that allow transactions outside the mandi mandate that while procurement may be direct, companies will have to pay a mandi tax. The CII recommends that the mandi tax be abolished.

It also urged the Government to extend nil excise duty to all branded and packed processed products made from perishable goods such as poultry, meat, milk, fruits and vegetable.

In case of products having excise duty of 16 per cent, abatement of 35 per cent should be increased to 40 per cent of the retail price after necessary review.

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