The Hindu : Business : Handmade soap industry seeks excise exemption

Online edition of India's National Newspaper
Friday, Mar 03, 2006

Business

Business

Handmade soap industry seeks excise exemption

Staff Reporter

`Marketing strategies adopted by mechanised sector hit industry'

KOLLAM: The handmade soap industry has registered its protest against the 2006-2007 Union Budget proposal withdrawing the excise duty exemption enjoyed by the industry.

In a statement, the district president of the Khadi and Village Industries Association, Kazim Sait, said that handmade soap is manufactured by a highly labour intensive small-sector industry with high overheads.

He said that duty exemption was the main factor that contributed to the survival of the sector in the competition with soap industry giants.

He said that through the withdrawal of the exemption, a 20 per cent duty is to be imposed on the sector. At the same time for the mechanised sector, the duty is being brought down from 25 per cent to 20 per cent. Mr. Sait said that such situation would compel the handmade soap sector to switch to mechanisation.

This in turn will spoil the qualities of ayurvedic preparations that went into the manufacture of the handmade soaps. Being labour intensive, there are a good number of labourers in each unit. If the withdrawal of the duty exemption compels the sector to go for mechanisation as a matter of survival, hundreds of these labourers would lose their jobs. The Union Finance Minister should reconsider the proposal, he said.

In a memorandum to Finance Minister P. Chidambaram, managing director of the Radhas Ayurvedic Soap Works B.A. Rajakrishnan, said that the handmade soap industry is struggling to survive in the market due to the marketing strategies adopted by the mechanised sector.

The survival is mainly on account of the duty exemption enjoyed. The industry also provides employment to a good number of persons.

The proposal to withdraw the exemption came as a big jolt to all in the industry. If the Duty exemption is withdrawn, the industry will be in jeopardy and face closure, he said.

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