These schemes have to be rationalised,'' insists the Committee member. Exporters, of course, will not accept this. Indian exports, he argues, can never be competitive unless the problems of high cost of credit, the poor quality of infrastructure and high customs duties are solved. With exports growing at 20 per cent, withdrawing sops for exporters won't be easy. Right now, the sector pays no taxes on capital investment of upto Rs 3 crore and no excise on sales upto Rs 1 crore.
Units also take advantage of a plethora of concessions.
Entrepreneurs usually close down existing units at the end of the concession period and set up new units to draw benefits again without any industrialisation actually taking place. The report, therefore, recommends the abolition or merger of the various schemes. Pointing out that SSI units get concessional duty, as well as full Cenvat credit, the Committee says units with a turnover of less than Rs 3 crore must pay 85-90 per cent of the normal rate of duty if they opt for Cenvat credit. The industry, of course, will have none of it. Committee members insist that these incentives have not produced the desired results.