Business Today

Budget 2012: Hike in excise duty will impact industry, says CII

In its pre-Budget memorandum to the Finance Ministry, the industry chamber has recommended continuation of 10 per cent standard rate of excise duty in the next financial year.

twitter-logo PTI   New Delhi     Last Updated: February 16, 2012  | 14:23 IST

Amid moderation in industrial output, the Confederation of Indian Industry (CII) on Wednesday said any hike in excise duty from the current 10 per cent would further impact growth and also put burden on consumers.

In its pre-Budget memorandum to the Finance Ministry, the industry chamber has recommended continuation of 10 per cent standard rate of excise duty in the next financial year.

"CII is of the view that any increase in excise duty in the Union Budget 2012-13 would adversely affect the growth prospects of the industry and result in higher cost to the consumer, in turn leading to inflation," it said.

Industrial growth as measured on the Index of Industrial Production (IIP) during April-December was meager 3.9 per cent compared to 9.0 per cent in the corresponding period of 2010-11.

In addition to the excise duty, state governments levy VAT of 12.5 per cent to 14.5 per cent on factory output.

CII pointed out that the effective tax comes out to be 24 per cent to 26 per cent which is quite high as compared to most of the countries.

Following the economic slowdown, that became prominent in September 2008, the government had provided fiscal stimulus, including cut in excise duty, to provide a cushion to the domestic industry.

As the government is faced with widening fiscal deficit, there are apprehensions in the industry that excise duty may be hiked in the Budget.

Finance Minister Pranab Mukherjee will be presenting the Budget on March 16.

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