Grey areas exist — Industry

Federation of Indian Chambers of Commerce and Industry (Ficci) president K K Modi stated that the reduction will go a long way in helping all sectors, particularly the small-scale sector and those segments which are import intensive. "The cost of production would have gone up if the high incidence of duty was not lowered."

Confederation of Indian Industry (CII) president Rajesh V Shah, while welcoming the move, expressed concern over the continuing exemptions on the traders and others from the special additional duty.

He felt that there is no rationale underlying the manner in which these exemptions had been applied and hoped that an exercisewould be undertaken soon to study the impact of it.

The additional duty had completely thrown the entire industrial activity out of gear at a time when the industry was reeling under a massive slowdown. CII president is also wary of a complete roll-back in urea price hike and said it was a step in reverse direction.

Shah also called for immediate action on restoration of 100 per cent Modvat credit on inputs with a 5 per cent modvat-able surcharge on excise duty payable.

A spokesperson for the Associated Chambers of Commerce and Industry of India (Assocham) said the move will strike a balance between conflicting interests. "We welcome it because in the earlier instance, the actual impact was between 12 to 16 per cent."

Welcoming the move, O P Vaish, president PHD Chamber of Commerce and Industry (Phdcci), said that in real terms, the duty incidence works out to 6 per cent and even more in view of this levy being imposed on the aggregated value comprising C.I.F, customs duty, special customs duty andCVD.

Subhodh Bhargava, CMD, Eicher group, described the step as a "sigh of relief" and complimented the finance minister for "fairly, and judiciously carrying out the correction required". On exemption under the EPCG scheme, Bhargava said: "The system must move towards VAT, less exemptions the better. I have never supported the nil exemption."L M Thapar, CMD, Ballarpur Industries Limited, said: "It is more realistic but in this case, it would have been better if the exemption for trading companies should also have been done away with."Govind Hari Singhania, vice-chairman and MD, JK Synthetics, also welcomed the rollback and called it a "more pragmatic step upon realisation of the real implications of such a step."