The Hindu : Tamil Nadu News : Thrust on rural economy welcome: trade chambers

Online edition of India's National Newspaper
Friday, Jul 09, 2004

Tamil Nadu

Tamil Nadu

Thrust on rural economy welcome: trade chambers

By Our Staff Reporter

CHENNAI, JULY 8. Leading chambers of commerce and industry of Tamil Nadu welcomed the Union Budget's thrust on developing the rural economy, while a few of them apprehended that the move to extend service tax to other areas and the levy of two per cent education cess will be inflationary.

R. Veeramani, president, Southern India Chamber of Commerce and Industry, described the budget as "innovative and creative." Terming the proposal to set up the first large-scale desalination plant here "most welcome," he, however, said the Chennai or Ennore port should have been considered for locating an international container trans-shipment terminal.

The announcement of a facility at Vallarpadam in Kochi would not be of much benefit to manufacturing units on the eastern coast. Moving the cargo to the western coast would involve additional cost.

While voicing concern at the hike in duty on steel and the "cascading effect on everything," he hailed the announcement on the setting up of an investment commission and training of manpower.

Murali Venkatraman, president, Madras Chamber of Commerce and Industry, said the emphasis on development of the agriculture sector and rural infrastructure should make growth more "balanced and sustainable."

Commending the focus on improving Industrial Training Institutes to keep them attuned to the changing needs of industry, he said fiscal incentives through restructuring of the capital gains tax would stimulate the capital market.

K.V. Shetty, president, Automotive Component Manufacturers Association, said the decision to allow auto component units 150 per cent deduction of expenditure on in-house research and development would enhance India's attractiveness as a highly competitive, low-cost base for global automobile majors for conducting R and D.

The three-tier graded duty structure for metal-based components, following changes in duties on non-alloy steels, alloy steels, copper, lead, zinc and base metals, would encourage local manufacturing activity.

The impetus to agriculture was bound to increase output and productivity, said G. Narayanaswamy, president, Hindustan Chamber of Commerce. Broadening of the service tax base and the education cess would be inflationary, he said, while calling the one per cent extra interest for senior citizens and retention of the interest rate on the public provident fund measures to soften the public opinion.

S.S. Rajasekar, president, Andhra Chamber of Commerce, said there should have been an exemption in service tax up to a specified turnover. The chamber hailed the option on CENVAT given to handloom and powerlooms.

Ashok Kumbhat, president, the Tamil Nadu chapter of the All-India Tax Payers Association, said the taxpayers were disappointed, as the reforms were not carried forward. They were disappointed at not getting the expected reduction in slab rates.

They were instead burdened with the levy of education cess.

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