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Capital goods market threatened by cheaper imports
The domestic capital goods sector worth Rs 4000 crore has been affected by large scale imports. Domestic manufacturers have said that zero duty capital goods pose the greatest threat to the sector. While customs duties have been cut by 5-15 per cent in the last budget, excise duties on most areas have been raised to a uniform 13 per cent. The cuts that were designed to attract new technology have instead brought in second hand and obsolete technology at the expense of domestic manufacturers. The CII has projected domestic manufacturers may have to contend with less than 25 per cent of orders by 1998-2000. The lack of modernisation and under-utilisation of capacity are seen as major obstacles. Senior director of CII Jayant Bhuyan said capital goods manufacturers want a correction in the duty structure under which raw materials and components attract higher duties than finished goods. With the addition of local taxes the domestic goods cannot compete against cheaper imports, he added. The CII wants uniform tax rate on raw materials, components and capital goods.