Industry body Ficci has sought a cut in excise duties on consumer products in the coming Budget and a reduction in interest rates, besides implementation of appropriate raw material policies to reverse the current slowdown in the manufacturing sector.
"While the slowdown is not pervasive and has affected only some sectors, it is a cause for concern. The trend may continue for some time, given the current economic scenario," the chamber said in a survey on the manufacturing sector.
In its recommendations, Ficci has suggested stimulating consumption and demand, reducing interest rates and corporate tax rate, appropriate raw material policies and improved regulatory environment to arrest the slowdown in the sector.
"There should also be no further cuts in custom duty on manufactured goods. Further relief package for exporters, increasing rate of depreciation, capacity building of SMEs, skill development and improving infrastructure would help in boosting manufacturing growth," it said.
With the slackening of demand resulting in a slowdown in growth, Ficci said the government needs to stimulate demand for consumer and industrial products through appropriate fiscal policies.
"As an immediate intervention, the forthcoming Budget should reduce excise duties on consumer products, which will stimulate demand," it said.
About 50 per cent of the respondents in the survey said slowdown in their sectors in the last few months has significantly affected investment plans of manufacturers in sectors such as textiles, machinery components, electrical products, project equipments, machinery, pressure vessels, tanks, heat exchangers and thermal transfer equipments.
The slowdown has also impacted operating capacities to the extent of 25 per cent in the last few months in food processing, electrical products, chemicals, dyes, building hardware, boilers and tanks. Hardening of interest rate was another major factor affecting growth.
The government also needs to provide relief to textile exporters by exempting service tax and neutralising impact of state levies. Appropriate raw material policy also needs to be devised to address constraints as availability of raw material at competitive rates was a problem for manufacturers in textiles and paper industry.
"There is a need to create awareness among small manufacturers about benefits of commodity exchange where raw material prices could be hedged," it said. Right regulatory environment was also crucial for growth of this sector. Around 46 central and 200 state statutes are directly related to labour market issues.
The survey noted that close to 45 man-days are wasted by industrial units in a year just to comply with regulations related to Standards, Weights and Measures Act. The government also needs to undertake measures for capacity building of medium and small enterprises, it added.
