Guwahati/New Delhi, March 6: Union minister for development of the Northeast C.P. Thakur today described certain measures envisaged in the budget for 2003-04 as “detrimental” to the economic health of the region and said the matter was “serious enough” to be taken up with the Prime Minister.
“The policies being followed by the Union finance ministry are short-sighted and do not take into account the ground realities in the Northeast. Otherwise, what was the need to initiate any step that is contradictory to the one announced by the ministry of commerce and industry'” he told The Telegraph after a meeting with the Northeast MPs’ Forum.
The Northeast industrial policy, introduced by the Union ministry of commerce and industry in 1997 for a period of 10 years, had offered incentives like tax holidays and exemption from excise duty to industries that would set up manufacturing units in the states of the region.
However, modifications to the policy by the finance ministry have raised the hackles of industrialists and legislators of the Northeast. With finance minister Jaswant Singh abiding by his predecessor’s decision to cut excise duty exemption to the four refineries of the Northeast by half, it is estimated that Numaligarh Refinery alone will lose Rs 230 crore annually.
Singh also rolled back excise duty exemption on cigarettes and pan masala, which had been offered in 1999 as an incentive for investment in the Northeast. The lifting of the exemption is with “retrospective effect”, which means that companies that had set up units in the region would have to refund the entire amount of money they had gained with the provision.
In a memorandum to Prime Minister Atal Bihari Vajpayee yesterday, the Northeast MPs’ Forum said: “Probably nowhere in the world are incentives given under a declared policy of government withdrawn retrospectively in detriment to the cause of the people, and that too of a very sensitive region. Such action, if not halted, will generate a permanent negative impact.”
Thakur said the Northeast industrial policy had been introduced after careful planning. “Two ministries working at cross-purposes indicates either a communication gap or the finance ministry’s lack of seriousness in developing the Northeast,” he said.
Manoj Jajodia of Promote Industrial North East, an organisation of entrepreneurs, said the decision would make prospective investors “think twice before venturing into the region, which has always been a Kalapani for them anyway”.
Excise-duty exemption on cigarette and pan masala had prompted corporate giants like ITC and VST to set up units in Assam. As many as 14 such units were set up in the state since 1999.
Industry sources said these units started winding up after the Centre called a halt to the process of excise-duty refund in July 2000. The last unit closed shop in December that year.
The president of the Federation of Industries and Commerce of the Northeastern Region, Abhijit Baruah, said the move was “absurd”. His counterpart in the Northeast Chamber of Commerce and Industry, Chiranjit Chaliha, argued that exemptions should not be withdrawn without valid reasons. “A lot of money invested by many companies has gone down the drain,” he said.
Assam chief minister Tarun Gogoi is backing the campaign by the Northeast MPs’ Forum.