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CEAMA is an all-India organization in the Consumer Electronics and Durables sector, looking after the common interest of the members, for sustainable growth and profitability. It has approximately 100 members and includes large, medium and small-scale sectors. CEAMA REDUCTION OF DUTY FOR LCD and LED TV PANELS 19" and INCLUSION OF PLASMA PANEL Notification No. 31 / 2012-Customs dated 8 th March 2012, exempts panels for LCD /
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Consumer Electronics and Appliances Manufacturers Association (CEAMA).pdf
CEAMA is an all-India organization in the Consumer Electronics and Durables sector, looking after the common interest of the members, for sustainable growth and profitability. It has approximately 100 members and includes large, medium and small-scale sectors. CEAMA REDUCTION OF DUTY FOR LCD and LED TV PANELS 19" and INCLUSION OF PLASMA PANEL Notification No. 31 / 2012-Customs dated 8 th March 2012, exempts panels for LCD /
CEAMA is an all-India organization in the Consumer Electronics and Durables sector, looking after the common interest of the members, for sustainable growth and profitability. It has approximately 100 members and includes large, medium and small-scale sectors. CEAMA REDUCTION OF DUTY FOR LCD and LED TV PANELS 19" and INCLUSION OF PLASMA PANEL Notification No. 31 / 2012-Customs dated 8 th March 2012, exempts panels for LCD /
CONSUMER ELECTRONICS AND APPLIANCES MANUFACTURERS ASSOCIATION 29 November 2012 1 2013-14 UNION BUDGET RECOMMENDATIONS PRESENTATION TO DEPARTMENT OF REVENUE MINISTRY OF FINANCE NOVEMBER 29, 2012 CEAMA INTRODUCTION Consumer Electronics and Appliances Manufacturers Association (CEAMA), is an all- India organization in the Consumer Electronics and Durables sector, looking after the common interest of the members, for sustainable growth and profitability. It has been in existence for last 33 years and has approximately 100 members. Members comprise of national and multinational companies and includes large, medium and small-scale sectors. LG, Samsung, Videocon, Panasonic, Philips, Haier, Godrej, Whirlpool, Onida, IFB, Lloyd, Sharp, TCL, Onkyo are some of our members. The sector Consumer Durables play an important role in the economy of the nation. Contributes >5.5% to the IIP. It is an employment intensive sector. For every 1 direct job in this space, ~ 3 indirect jobs are created. This sector has been the engine of economic growth for Japan post-WWII, South Korea China and S E Asia have benefitted equally in later decades. Considering the low levels of penetration of Consumer Durables, this sector has immense growth potential and job creating opportunities. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 2 CEAMA BUDGET RECOMMENDATIONS 1. Customs 2. Central Excise 3. Service Tax 4. Miscellaneous 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 3 CEAMA 2013-14 BUDGET RECOMMENDATIONS CEAMA RECOMMENDATIONS ON CUSTOMS DUTIES 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 4 CEAMA REDUCTION OF DUTY FOR LCD & LED TV PANELS <19 & INCLUSION OF PLASMA PANEL Notification No. 31/2012-Customs dated 8 th March 2012, exempts panels for LCD/LED TVs of =>19 from Customs Duty. Industry had requested exemption of duty on panels of all sizes i.e. even < 19. The sizes of LCD/LED CTV < 19 will see robust demand in the mass segment due to lower price points. Some of our members are now planning to manufacture Plasma TV, which so far was only imported. RECOMMENDATION: To favorably consider modifying the notification from 19 inches & above LCD/LED panels to LCD/LED & Plasma panels of all sizes. REVENUE IMPLICATION: Negligible as presently there is little import of panels <19 & of Plasma Panels. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 5 1 CEAMA IMPORT DUTY ON SET TOP BOX Digitalization of TV will create huge demand for Set Top Boxes in the country. likely to touch 20 M units per annum. Current demand met by imports. Indian manufacturers face huge disability factors; future demand will favor imports unless the playing field is leveled. The disability factor is in 12.5% VAT applicable to Indian manufacturers as Cable & DTH operators do not provide them C Form since they lease (and not sell) boxes. Further, importers do not pay any VAT. Inverted Duty on Set Top Boxes is an additional hindrance. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 6 2 Input for Set Top Boxes Customs Duty AV Cable 7.5% RCA Jack 7.5% Tack Switch 7.5% USB Cable 7.5% Smart Card Holder 10.0% CEAMA RECOMMENDATION: We strongly recommend Customs Duty on Set Top Boxes be increased to 10% (currently 5%) for at least two years, to encourage local manufacturing REVENUE IMPLICATIONS.A GAIN OF RS 83.0 Cr 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 7 THE INDUSTRY IS IN INFANCY STAGE AND NEEDS PROTECTION FOR AT LEAST TWO YEARS Estimated STB imports in 2013-14 Cable DTH 17.5 M 7.5 M Price Cable DTH $ 17.0 $ 25.0 Current import volume Cable DTH 90% 60% Import volume with 10% import duty Cable DTH 70% 50% Revenue Gain Cable: 17x55x.05x17.5x.7x10 6 DTH: 25x55x.05x7.5x.5x10 6 Rs 57.2 Cr Rs 25.8 Cr CEAMA SAD LEVIED U/S 3 (5) OF CTA BE ABOLISHED Manufacturers selling parts & components, post imports, have to undergo a time consuming and cumbersome Refund process for recovering Special Additional duty (SAD) allowed under NotIfication 102/97.. takes ~9-12 months leading to high transaction cost. RECOMMENDATION: SAD levy may be removed as it does not generate any revenue for the Govt. For traders, SAD is exempted and for manufacturers CENVAT credit available. Moreover, this is adding to transaction cost of companies. Removal of SAD will not only result in cost saving for Industry but also manpower saving for the Government. Alternatively, the current SAD exemption Notification 21/2012 Sr 2 should be amended to include exemption for bulk and institutional sale. REVENUE IMPLICATION: Negligible, as CENVAT / refund is allowed. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 8 3 CEAMA DUTY REDUCTION ON PROJECT IMPORT FROM 5% TO 0% At present, project imports attract 5% BCD as against 7.5% otherwise. The process of registration and compliance is lengthy because of which companies are unwilling to avail this benefit. Moreover, customs duty gap is only 2.5%, as against stringent compliance. Thus there is practically no incentive for new projects/investments. Customs duty under project imports should be 0% for our sector. This will enhance manufacturing set-ups and will invite new technologies/investments into India, furthering the objective of making it a manufacturing hub and creating new employment opportunities. REVENUE IMPLICATION: Total project imports for sector estimated at Rs. 500 Cr. The loss would be Rs. 25 Cr. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 9 4 (UNDER CHAPTER 98 OF CTA) CEAMA DUTY REDUCTION ON R&D IMPORTS.. FROM 5% TO 0% Currently R&D units registered with the MOS&T can avail reduced BCD of 5% on complying with conditions laid down in Notification 51/96. RECOMMENDATION: Customs Duty for R&D items should be 0% to promote R&D in India, especially for Electronics, Air Conditioning and Refrigeration industry, where the growth potential is high. This will invite more R&D set-ups in addition to technological advancement and more innovative Indian products. REVENUE IMPLICATION: Total R&D investment for sector ~Rs.150 Cr. Loss would be ~Rs7.5 Cr. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 10 5 (NOTIFICATION CUS. 51/96) CEAMA DUTY CONCESSION ON MANUFACTURING OZONE FRIENDLY PRODUCTS BY INDIAN MANUFACTURERS Currently Customs Duty exemptions are for import of machineries designed exclusively for Non-ODS Technology but Parts, Components and Spares do not have customs duty exemptions. RECOMMENDATION: Customs duty relaxation ought to be allowed on Parts, Components and Spares for manufacturers who adopt Non-ODS technology in manufacturing. This will incentivize manufacturers who have to invest huge amounts to change technology from current practices to Ozone friendly ones and invite more Non-ODS technology in India, which could open up the markets for Exports. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 11 6 CEAMA DUTY REDUCTION ON IMPORT OF MAGNETRON (HSN: 85407100) AND OTHER INPUTS FOR MICROWAVE OVENS (HSN : 85407100) In the 2010-11 Budget, Customs Duty on magnetron was reduced to 5% under IGCR condition. Companies who import components contract manufacture cannot claim this benefit ; they are liable to pay 10% Basic Customs Duty. Most companies import Microwave Ovens as CBU from SEA at under India-ASEAN FTA with duty that will be 2.5% effective January 2013. Only one company is manufacturing in India. The major parts which have a customs duty of 7.5 /10.0 % are listed below:- 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 12 7 (NOTFN CUS 12/2012 SR NO.433) Sl. No. Description HSN Present Customs Duty CIF Import (Rs Cr.) Customs Duty (Rs Cr.) 1. Magnetron 85407100 5% under IGCR otherwise 10% 12.79 1.27 2. High Voltage Transformer (HTV) 85043200 10% 10.5 1.05 3. Glass Tray 70139900 10% 1.20 0.11 4. Door Assy 85169000 10% 11.25 1.12 5. Controller Assy 85169000 10% 8.75 0.87 6. Motors 85011019 7.50% 3.28 0.30 CEAMA RECOMMENDATION: Customs Duty on Magnetron & other items listed should be 0% without IGCR condition. These components the essential & high value parts of Microwave Ovens, which are not made in India and unlikely to come up in near future due to high cost of investment for the current size of market REVENUE IMPLICATION: Loss is Rs 4.7 Cr. However, it would lead to employment generation in the country. These items are exclusive for Microwave Ovens, hence there is no chance of them being misused. Reduction of Duty will encourage more companies to manufacturing Microwaves in the country and will be able to tap export potentials. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 13 CEAMA DUTY REDUCTION ON HIGH TECHNOLOGY MACHINES AND EQUIPMENTS IMPORTED BY INDIAN MANUFACTURERS Currently these machines attract 7.5% BCD as against a peak tariff of 10%. No special benefit of customs duty is available for high technology machines. RECOMMENDATION: Basic Duty on these items should be reduced to zero percent to promote new technology in India. This will also lead to innovative, high quality Indian products and open up export markets. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 14 8 CEAMA CLARIFICATION TO NOTFN NO 12/2012 SR. 432 ON LCD PANEL/ MODULES LCD TV manufacturers are importing LCD Panel/Module which is an essential and vital part for LCD/LED TV. MoF has considered the recommendation of CEAMA and customs duty on the same is 0% under Notfification # 12/2012 Sr 432. There is large scale ambiguity as some of the manufacturers call the items LCD Panel and others LCD Module. Irrespective of nomenclature, all Panels consist of Liquid Crystal Display. At various ports, Customs has interdicted the consignments as the notification only mention LCD Panels. RECOMMENDATION: MOF issues clarification to Notification # 12/2012 Sr 432 to the effect that LCD Panel/Module is the same product. Also, since there is no manufacturing of this part in India, all such LCD Panel/ Module should be exempt from duty. REVENUE IMPLICATION : Nil 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 15 9 CEAMA INVERTED DUTY STRUCTURE DUE TO FTAS MAKING INDIAN MANUFACTURING UNCOMPETITIVE Finished goods are allowed to be imported from countries under FTA at zero duty. For example, India-Thailand FTA covers Colour Television, LCD TV, PDP TV, Air Conditioners, Refrigerators etc., which can be imported under 0% Basic Customs Duty vide Notification Cus 85/2004. Companies who import components of these items at peak rate of duty for manufacture are unable to meet competition of cheap imports. The major parts which have a customs duty of 7.5 /10 % are list below:- 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 16 10 S.NO. DESCRIPTION HSN PRESENT CUSTOMS DUTY 1. Clutch Assembly for WM 84509010 10% 2. Motor for AC & Ref 85011020 7.5% 3. Sensor for AC & Ref 84189900 10% 4. Timer for WM 91070000 10% 6. Pre printed Steel Sheet (PCM/VCM) 85011019 7.5% CEAMA RECOMMENDATION: We recommend that MOF should take suitable action to remove the inverted duty structure on Consumer Electronics and Appliances. Alternatively the customs duty for parts and components listed above should be put under 0% Basic customs duty. REVENUE IMPLICATION: Rough estimates indicate it to be ~Rs.200 Cr. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 17 CEAMA MISCELLANEOUS RECOMMENDATIONS RELATED TO IMPORTS - EXPORTS Advance Customs Clearance - Should be introduced wherein importers can clear the goods a week before and take delivery of the goods immediately on arrival. Post delivery of the goods, IGM should be linked with the B/E and closed in customs system. This facility should be either extended to all or importers holding special status like AEO and ACP. Fast Track Litigation Settlements - Suggest a single window should be introduced for fast track settlement of small litigations, demands, SCN etc, which could result in settlement of large number of dispute in minimum time, thereby saving huge time and money for industry and government. Reduction In Air Freight Percentage For Calculation Of Customs Duty - Currently it is 20% of FOB value of imports, which is on the higher side comparing actual transportation cost and should be reduced to 6%. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 18 11 CEAMA MISCELLANEOUS RECOMMENDATIONS RELATED TO IMPORTS EXPORTS.CONTD Removal of Unjust Enrichment Clause: Industry is forced to comply with the unjust enrichment clause for all refunds, even for low value refunds. The unjust enrichment condition should be removed for refunds below Rs 5 L. On Line Customs Assistance to Trade: An on-line Customs facilitation should be introduced which can guide industry on matters such as Import-Export regulations, Import-Export duty rates, classifications, etc. Import of Commercial Items in Baggage: Import of commercial items in personal baggage should be allowed for large manufacturers to meet contingencies like critical spare parts for repairs, production shortages etc. on payment of applicable customs duty. Single Window Facilitation: Large importers and exporters holding ACP & AEO status should have single window facilitation for all customs matters. Priority should also be extended to such importers for issue settlement and clarification in MoF. Currently all importers are given RMS under self assessment scheme and special status importers do not get any additional facilitation. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 19 CEAMA FINANCIAL IMPLICATION OF CUSTOMS RECOMMENDATIONS Recommendation Revenue Gain Revenue Loss Neutral Not Estimated Duty Reduction on <19 panels Higher import Duty on STB 83.0 Abolishing SAD Duty Reduction on Project Imports 25.0 Duty Reduction on R&D 7.5 Duty concession for Ozone Friendly Products Duty Reduction on Magnetrons 4.7 Duty Reduction on Hi Tech Machines Clarifications on Notifications on LCD/LED panels Correction of inverted duty structure of FTA countries 200.0 83.0 236.9 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 20 Net Loss: Rs 153.9 Cr Figures in Rs Cr CEAMA 2013-14 BUDGET RECOMMENDATIONS CEAMA RECOMMENDATIONS ON CENTRAL EXCISE 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 21 CEAMA REDUCTION OF DUTY ON 14 COLOR TELEVISION (HSN : 85281211) AND 14 COLOR PICTURE TUBE (HSN : 854011) TO 5% Excise duty on 14" CTV is the same as on CTV of sizes 21"/Ultra Slim as well as LCD & LED of all sizes. Demand for such TVs is now only in rural markets or lower income groups. As such, duty on 14" CTVs need special consideration. There are many MSMEs who manufacture such TV sourcing Colour Picture Tubes (CPT) from two Industrial units. The MSME TV units are on the verge of closing down and CPT units are also sick. If these close down, it will render many persons unemployed. RECOMMENDATION: Excise Duty should be brought to 5%. This will provide a new lease of life to SME TV Units & CPTs manufacturers, thus avoiding large scale unemployment. REVENUE IMPLICATION: Market for 14 CRT TV is projected to be 2.0 M in 2013-14 with an average price of Rs. 4,000. Loss of revenue would be ~ Rs 35 Cr. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 22 1 CEAMA EXCESS CREDIT OF CENVAT SHOULD BE ALLOWED AS REFUND There is no provision to get refund of accumulated CENVAT credit as per Rule 3 of CCR 2004. Manufacturers are facing problems for CENVAT accumulation because of levy of SAD , flow of input services and lower value addition in product profile. Since the accumulated CENVAT is nothing but prepaid tax, refund of the same should be allowed after making necessary amendment in the rule. This will lead to increased financial health & cash flow of manufacturers. REVENUE IMPLICATION: Industrial units in the sector are estimated to have a unused CENVAT credit of about Rs. 200 Cr 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 23 2 CEAMA CENVAT CREDIT ON CAPITAL GOODS CENVAT Credit in respect of Capital Goods received in factory in a given financial year is only 50% and 50% is deferred to next financial year, as per Rule 4 of CCR 2004. RECOMMENDATION: 100% credit should be allowed Year 1 itself. This will help save transaction cost. REVENUE IMPLICATION: In our sector, approximately Rs. 30 Cr is deferred to the next financial year. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 24 3 CEAMA EXCISE DUTY CONCESSION ON MANUFACTURING ENERGY EFFICIENT PRODUCTS AIR CONDITIONERS (HSN : 841510) REFRIGERATORS (HSN : 841810) There are no additional benefits for manufacturing Energy Efficient products. Our country is energy deficient. Energy conservation is vital and government should provide incentives for manufacturing energy efficient products, particularly high energy consuming categories such as Air-Conditioner & Refrigerator. Presently 25% of Refrigerators & 10% of Air-Conditioners have 5 Star rating. RECOMMENDATION: Excise duty relaxation should be allowed on manufacturing of 5 star rated Air-conditioners & Refrigerators & their compressors ( 841430 & 841480), to 5%. This will encourage manufacturing of more energy efficient products in India at a time when energy standards are undergoing a severe upward revision. REVENUE IMPLICATION: 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 25 4 Refrigerators (Market 10 M/ Av Price Rs 7,000) 10x.25x7000x.06 Rs 105 Cr Air Conditioners Market 4 M/Av Price Rs 20,000 4x20000x.1x.06 Rs 48 Cr CEAMA REVERSAL OF CENVAT CREDIT ON CAPITAL GOODS CLEARED As technology in our sector changes rapidly and rate of technological obsolescence is high, the life span of many Capital Goods like moulds and dies are not more than 5 years. In such cases effective duty credit available is only 40 to 50%. RECOMMENDATION: 1. Effective life of Capital Goods should be reduced to 5 years from current 10 years, at least for sector such as electronics, where technological changes are rapid. 2. For removal of Capital goods as waste & scrap, CENVAT credit taken should be reduced by prescribed percentage or on transaction value whichever is higher as per Rule 3 (5A) of CCR Rule 2004. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 26 5 CEAMA INCREASE IN THE ABATEMENT RATE FOR MRP BASED EXCISE DUTY ON CONSUMER DURABLES Consumer Durables attract MRP-based valuation under Sec 4(A) of the Central Excise Act, 1944. The current level of the Abatement is as under:- The increase in Excise Duty from 10% to 12% has adversely affected industry that is already impacted by inflation in commodity and low demand. Though MRP forms the basis of Excise Duty valuation, in real terms the product is never sold at MRP but at a discount to the MRP. Hence from a manufacturer/importer point of view, while excise duty is being paid on higher value, sale is transacted at lower rate. As a result, full value realization does not happen. Increase in abatement rate will ensure that the product is taxed at a price closer to the realized price level by the manufacturer/importer. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 27 6 Sr. No. Description of Goods Abatement 1. Air Conditioner 35% 2. LCD Television 35% 3. Refrigerator 35% CEAMA This is also in line with the valuation principle propagated by the Excise Law, wherein it is stated that the Excise Duty is chargeable on the assessable value, i.e. value realized by the manufacturer in an arms-length transaction. To save the Home Appliances manufacturers from significant losses, it is suggested that the MRP based assessment for Consumer Electronics & Home Appliances products should be increased to 40% from the current level. REVENUE IMPLICATION: Total Turnover Rs. 25,000 Cr Increase in Abatement would reduce Excise Duty by 0.6% Revenue loss would be Rs. 150 Cr 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 28 CEAMA FINANCIAL IMPLICATION OF EXCISE RECOMMENDATIONS Recommendation Revenue Gain Revenue Loss Neutral Not Estimated Duty Reduction on 14 CTVs and CPTs 35.0 Excess Credit of CENVAT as Refund 200.0 CENVAT Credit on Capital Goods 30.0 Duty Reduction on Energy Efficient Products 153.0 Reversal of CENVAT on Capital Goods Cleared Increase in Abatement Rate 150.0 568.0 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 29 Figures in Rs Cr CEAMA 2013-14 BUDGET RECOMMENDATIONS CEAMA RECOMMENDATIONS ON SERVICE TAX 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 30 CEAMA REMOVAL OF DOMESTIC REVERSE CHARGE MECHANISM Approximately 10 services are notified under reverse charge, by which either full or partial liability of service tax is shifted to service receiver. Shifting of liability on service receiver is a paid point to tax payers. RECOMMENDATION: Either reverse mechanism should be removed OR partial reverse charge should be converted into full reverse charge to avoid the mistakes in huge business operations. This will lead to increased operational efficiency and correct tax remittances. Current exemption of 10 Lac to small service provider is not available to service receivers in case of reverse charge methods. RECOMMENDATION: Exemption should be extended to service receivers also. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 31 1 EXEMPTION OF SERVICE TAX ON SSI LIMIT OF 10 L 2 CEAMA TRANSACTION BETWEEN EMPLOYER TO EMPLOYEE SHOULD BE EXEMPTED SERVICES From 1 st July12, all services are taxable except services which fall under negative list and exempted services. Services with respect to Employee to Employer is covered by exemption notification but services with respect to Employer to Employee is not covered by exemption notification, if the employer make partial or full deduction from employee like canteen, bus subsidy etc. RECOMMENDATION: Services in relation to Employer to Employee should also be exempted from payment of service tax. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 32 3 CEAMA 2013-14 BUDGET RECOMMENDATIONS CEAMA MISCELLANEOUS RECOMMENDATIONS 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 33 CEAMA VAT APPLICABLE ON SET TOP BOX GIVEN TO CUSTOMERS (LEASE OR SALE UNDER RIGHT TO USE) It is expected that over the next 3 years, there will be a demand of almost 150 M subscriptions to DTH through Digital Set Top Boxes. At present, 90% of this demand is being met through imports ex-China. This is despite availability of large capacities (~50 M) for manufacturing Set Top Boxes in the country. DTH/Cable operators, who provide content to subscribers through a Set Top Box, pay Service Tax only on the content provided and not on the Set-Top Box which is packaged as installation/activation charge, with tax being charged on installation alone. They are therefore unable to issue Form C, making the landed cost of locally manufactured products more expensive since Indian manufactures have to pay CST equivalent to local VAT (which is 12.5% without `C form). RECOMMENDATION: The facility provided to Telecommunication Network for issuing Form C should be extended to Set Top Box also. REVENUE IMPLICATION: The state governments would garner additional revenue through CST against the present status which is nil. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 34 1 CEAMA CONCESSIONAL RATE OF INTEREST ON LOAN FOR PURCHASE OF CONSUMER ELECTRONICS & HOME APPLIANCES, PARTICULARLY IN RURAL AREAS Consumer Electronics and Home Appliances enhances the quality of life millions of households and contributes > Rs. 10,000 Cr to the Union & State exchequers. This sector is facing a slowdown in demand and hence underutilization of manufacturing capacity by ~ 50%. High interest rates is one reason for slowdown of demand . RBI estimates a 20% fall in consumer durable loans H1 of 2012-13. About 15% of purchases of Consumer Durables (substantial part is in rural/small towns) is against financing by Banks/NBFCs. To ensure that the industrial units, particularly small and medium units, do not close down due to the sluggish demand thereby making thousands of people un-employed, there is a need to take steps for the revival of the industry. RECOMMENDATION: Since mass consumer durable products such as CRT TVs / small LCD TVs, washing machines and refrigerators are bought by lower middle income groups, interest on durable loans should be lowered to 9%, as a special case. REVENUE IMPLICATION: Considering a turnover of our sector as Rs. 40,000 crore and taking 15% of the sale is on Finance, a reduction of 1% interest would result in a financial outgo of Rs. 60 crore. It would be made up to some extent with Increased demand. 29 November 2012 2013-14 UNION BUDGET RECOMMENDATIONS 35 2
Schemes: - The Industries Act 1951 - Msmed Act 2006 - Competition Act 2002 - GST, IBC - MAKE IN INDIA, PLI, Start Up India, DTI Scheme - Sez, Nimz, Tech Parks, Mega Parks