Indian Budget 2003-2004

• reduce excise duty on polyester filament yarn from 32 per cent to 24 per cent;
• reduce excise duty on all spun and other filament yarns from 16 per cent to 12 per cent;
• retain the 8 per cent excise duty rate for pure cotton yarn only;
• reduce excise duty on all knitted cotton fabrics and garments from 12 per cent to 8 per cent;
• reduce excise duty on all woven fabrics and other knitted fabrics from 12 per cent to 10 per cent;
• reduce excise duty on garments from 12 per cent to 10 per cent;
• withdraw exemption for all knitted and unprocessed woven fabrics;
• remove the scheme of deemed credit so as to complete the CENVAT chain;
• retain exemption for hand processed fabrics but only if no power or steam is used in any process;
• continue the existing exemptions for handloom fabrics, silk, khadi and polyvastra; and
• reduce the basic customs duty on paraxylene from 10 per cent to 5 per cent.

94. The procedure for the decentralized sector will be simplified so as to exempt job workers from maintaining any central excise records or even from central excise registration. Garments and fabrics manufactured by non-profit charitable institutions will, however, be exempt from excise duty.

95. As for customs, the duty on apparel grade raw wool shall now be reduced from 15 per cent to 5 per cent. Further, to encourage modernisation of the textile industry, it is proposed that the customs duty on a large number of textile machinery and their parts be reduced from the existing 25 per cent to just 5 per cent.

96. Simultaneously, it is necessary to give a helping hand to the power-looms. For this decentralized sector, it is proposed to strengthen the existing programme for Induction of Technology in the Weaving Sector further by offering a ‘Power-loom Package for Modernisation’. This package will have the following three features.

97. First, the Technology Up-gradation Fund Scheme will be enlarged to cover modernisation of power-looms.

98. Second, to create a better working environment and obtain higher productivity, a new Power-loom Workshed Scheme will be introduced by the Ministry of Textiles together with the State Governments. Improvement of other infrastructure of existing power-loom clusters will be taken up under the revised Textile Sector Infrastructure Development Scheme.

99. Third, as a welfare measure, all powerloom workers will be covered under the Special Insurance Scheme, which will provide them insurance cover against death, accident and disability.

100. Recognising the need to prevent sickness in the textile industry, Government is considering a mechanism for restructuring the debt portfolios of viable and potentially viable textile units. The details will be decided in consultation with all the stake holders.

101. All the benefits listed under health-care will also promote pharmaceutical industry. Besides, income tax concessions to pharmaceuticals, bio-technology and information technology are at par. All drugs and materials imported or produced domestically for clinical trials will be exempt from customs and excise duties. Customs duty on import of Reference Standards by the industry has been reduced from 25 per cent to 5 per cent.

102. IT is India’s showpiece success story. We have to not just maintain its momentum of growth, but continuously encourage it. Therefore, it is proposed that the concessions extended to IT under Sections 10A and 10B of the Income Tax Act will continue as originally envisaged. As per law such companies as are currently covered by these tax exemptions lose the benefits upon change in their ownership or shareholding. This is not logical. I am, therefore, removing these restrictions; the benefit of such tax exemptions will remain even in the case of amalgamation or de-merger.

103. Another anomaly is levy of excise duty on pre-loaded software in the case of computers. As software is already exempt from excise duty, I see no reason why this benefit should be denied simply because it gets loaded in a computer. From now, the value of pre-loaded software will be excluded for the purpose of charging excise duty on computers.

104. Customs duty on specified electronic components for IT industry is being reduced in conformity with our WTO commitment.

105. In addition, customs duty on a number of capital goods used by the telecom and IT sector for manufacture of components will be reduced from 25 per cent to 15 per cent. For optical fibre cables, used widely for networking to provide bandwidth to the IT community, the customs duty is also being reduced from 25 per cent to 20 per cent. To help the domestic industry to manufacture e-glass roving used for making optical fibres, it is proposed to reduce the import duty on specified raw materials for the manufacture of e-glass roving from 30 per cent to 15 per cent.

106. Telecom and domestic satellite service companies enjoy the benefit of tax holiday. Since it takes quite some time for such projects to materialize, I propose to extend the deadline of setting up the units by one more year to March 31, 2004.