karnataka-news

Higher tax, weak rupee hit small enterprises in Karnataka

Bangalore, Aug 31 : Hundreds of micro, small and medium enterprises (MSMEs) across Karnataka are reeling under the double impact of exorbitant value added tax (VAT) and steep depreciation in rupee value against dollar, an industry representative said Saturday.


"Due to exorbitant VAT rate (14.5 percent) in the state and weakening of the rupee against dollar and euro by 15-20 percent, we are unable to compete with our counterparts from other states, which have lower VAT rate," state MSMEs representative J. Crasta said here.

With import of raw materials and components becoming costlier due to currency volatility, Crasta said many units across the state were on the verge of closure as they were unable to hardsell their products and can't afford to pile up inventories beyond a limit.

"As VAT rates are less than five percent in the neighbouring states on similar products we manufacture, purchase orders for our goods have declined substantially during the last couple of months. It is difficult to survive in a non-level playing field," Crasta said in a statement.

The Karnataka State Small Industries Association (Kassia) urged the state government to reduce the VAT rate to eight percent from 14.5 percent so as to enable the MSMEs in the state compete with their counterparts in the domestic and overseas markets.

"OEMs (original equipment manufacturers) are purchasing components, subsystems and ancillary parts from MSMEs in other states as they are able to offer the products at a lesser price than us. Increasing overheads due to higher power tariff and logistics are also impacting our margins," Crasta argued.

State Planning and Statistics Minister S.R. Patil assured the association that he would soon take up the issue with Chief Minister Siddaramaiah, who also holds the industry and finance portfolios, for reducing the VAT rate to eight percent.

As a nursery of entrepreneurship, the MSME sector accounts for eight percent of the national gross domestic product (GDP), 45 percent of the manufactured goods and 40 percent of its exports. The sector provides employment to about 60 million people through 26 million enterprisesacross the country.

--IANS (Posted on 31-08-2013)

karnataka-news headlines

67 percent polling in Karnataka; lowest in Bangalore

65 percent polling in Karnataka's 28 LS seats

61 percent polling in Karnataka, 50 percent in Bangalore

Karnataka directed to build wall across controversial canal

Congress will win big in Karnataka: CM

As many as 7 people die during polling in Karnataka

Nilekani hopeful of winning with "Parivartan" vote

Bangalore wants development, BJP will win: Ananth Kumar

Brisk voting in Karnataka

Actors outstar politicians, Ramya hogs Google search in Karnataka

Karnataka votes for all 28 Lok Sabha seats

Six dead in Karnataka after tourist bus catches fire

Quick Links: Goa | Munnar | Pondicherry | Free Yearly Horoscope '2014

Comments

Your e-mail:


Your Full Name:


Type verification image:
verification image, type it in the box

Message:

Back to Top