Jamshedpur : The industrial units of one of Asia�s biggest industrial hubs, Adityapur Industrial Area, have welcomed Jharkhand�s Government�s decision to reduce VAT on auto components from 14 per cent to five per cent. The units had demanded immediate reduction in Value Added Tax (VAT) rate on automobile components.
The officials of Adityapur Small Industries Association (ASIA), said that due to high VAT rate in the State companies like Tata Motors had started sifting production to other states like Uttrakhand, where the VAT rate is much lower. However the move of the Government is a welcome step.
Officials of ASIA, said that in the past months, the ancillaries have suffered loss. Due to high competition faced by the local automobile sector including Tata Motors because of high rate of VAT in the state, they are regularly taking shut downs.
�We had written to the State government to immediately take a call on the matter. The companies engaged in the automobile sector in Jharkhand had to cough up 12 to 14 per cent VAT against 4 and 5 per cent in Bengal and Bihar respectively, as a result of which companies like Tata Motors faced stiff competition in the global market. However the cut in the VAT will bring much relief to the manufacturers,” said the official.
�We had asked for 4 to 5 per cent VAT on all products including ancillary products such as engine, axil, propeller, among other items, to promote business in Jharkhand and our happy that the Government has fixed five per cent VAT,� he noted.
R K Sinha, senior functionary of ASIA said that the decision is a welcome move. At least, 20 per cent of the ancillaries that flourished piggy-ridding the demand-intensive market six years ago were forced to close down their units. He said that for long the industrialists have been seeking cooperation from the state government in addressing their grievances particularly on specific issues of land, electricity water and road. The reduction in VAT is a positive step.
With Tata Motors drastically cutting production to tide over tough times vendors and auto ancillary units in the region, are still facing perhaps their toughest challenge.
The small and medium industry had also appealed to the Union government to announce multi-crore investment projects in the sectors like road construction (national highway) and real estate.
There are about 1,100 industrial units in the Adityapur industrial area employing over 60,000 workers. The sprawling Adityapur Industrial Area houses more than 1100 units, including 11 large-scale, 64 small scale and 166 tiny industries. A few important industries that have global presence are Usha Martin Group and RSB Group.
There are 20 industries, which export its products to the USA, Australia and other European countries.