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Sharp fall in capital goods production

14 Mar '08
3 min read

Raw material price increase has also led to some price increase for the consumer, to which the consumers have not responded positively, said CII.

The growth in non-food bank credit off take during the period April to February 2007-8 has consistently declined over these 11 months when compared to the corresponding period of last year.

The decline in growth of non-bank credit ranges from 6% to 11.7% over the 11 months of 2007-08. Overall, during the period April-February 2008 the non-food bank credit has declined by Rs. 18,760 crores, said CII.

CII strongly feels that with average Inflation at acceptable levels during the current fiscal, there is room to bring down interest rates to boost consumption demand as well as investment demand.

CII submits that any further decline in the growth of IIP, especially that of Capital Goods, Electricity and consumer durables need to be arrested.

Further, CII also has called for the following measures that would boost the capital goods sector in the medium to long term and provide growth impetus for capital goods sector.

- A minimum custom duty on the capital goods should be raised to 10% to have the level playing field with the imports from China.
- India currently has a 35% disadvantage when compared to China due to China's controlled currency and subsidies.
- The government should persuade western countries to lift restriction on export of CNC controls and machines now classified as 'dual-use'.
- A scheme similar to the TUF to be implemented for capital goods industry, specially focused on engaging the SME sector.
- Introducing a scheme for modernization and technology upgradation
- Granting 150% deduction in terms of R&D to the capital goods sector,
- Reducing, exempt excise duty from components of textile machinery where the finished machinery is exempted from excise duty,
- Allocation for Parks dedicated for high technology capital goods.

Confederation of Indian Industry

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