Budget 2000: exemption to exporters removed

While there has been nothing in the budget 2000, presented by the finance minister, Yashwanth Sinha on 29 February, targeting leather industry in particular, some of the generic proposals - especially incidence of corporate tax on export oriented units, previously exempted - may have considerable impact on the industry. Excise duties on leather bags and footwear, for instance, remain unchanged at 16 percent, though there has been a special additional duty of 8 percent, apart from 16 percent, basic excise duty on fur skins. Customs duty on fur skin and footwear continue to be 16.5 and 27.5 percent respectively, while leather bags saw a marginal decrease by 0.5 percent. The incidence on other products such as countervailing duty on wattle extract (now increased to 16 percent), will also affect the cost structure of the industry. Among the proposals that are likely to have deeper impact is the decision to to remove the exemption from the income-tax being given to the export-oriented units. This may affect the firms planning to invest in modernisation programmes, but it is hoped that five-years will give enough elbow room for the exporters to adjust to the new fiscal environment. The proposals for small scale industry including the increase in the limit of collateral free loans for tiny sectors and in the composite-loan limit for small borrowers will benefit the leather units in these sectors. The extension of taxholidays to water treatment plants will induce commercial investment into an area increasingly considered to be important for the long term prosperity of the industry.