Financial Daily from THE HINDU group of publications
Friday, May 12, 2006
Industry & Economy
Government - Politics
States - Tamil Nadu
TN Industry wants early introduction of VAT
Chennai , May 11
Regular interaction and a switch over to a value-added tax system. These are just two of the issues that the industry in Tamil Nadu wants the new Government to address. A DMK-led government is expected to be sworn in before the end of this week.
The industry believes that the transition from an AIADMK Government to a DMK-led one will be smooth, especially since the DMK has been in power in the State and the industry itself has worked with the DMK President, Mr M. Karunanidhi, when he was Chief Minister on earlier occasions.
With the DMK being a part of the United Progressive Alliance Government at the Centre, the industry is hopeful that the Government will switch over to a value-added tax system at the earliest. Tamil Nadu and Uttar Pradesh are the only States not to change over to a VAT regime.
Mr B. Santhanam, Managing Director, Saint-Gobain Glass India Ltd and former President, CII-Tamil Nadu State council, said for the industry, which has had regular interaction with the government, this was process continued. The new government, he was confident, would only leverage on the State's administrative efficiency. He also expected many projects to be put on fast-forward mode thanks to Centre-State relations.
Mr P.S. Jayaraman, Managing Director, Chemplast Sanmar Ltd, hoped the new Government would introduce VAT. Some Tamil Nadu-based companies were hoping to expand outside the State.
If VAT were to be introduced they might re-think on this plan as they would have a level-playing field even here, he said.
The industry would also like the Government to pay immediate attention to infrastructure, both in Chennai and the other towns, if the State is to continue to be an attractive investment destination.
Industry representatives said some major investments, particularly in the leather and information technology sectors, went to other States because of the pro-active attitude of the administrations there.
According to Mr Rafeeque Ahmed, Chairman, Tamil Nadu State Council, Federation of Indian Chambers of Commerce and Industry, the new Government should play a proactive role in interacting with the industry. It should not only focus on attracting investments from large players but also from small and medium industries and support existing industries.
A mechanism for regular interaction between industry and the Government is needed. A committee with representatives from a cross section of the industry could be considered as there is a `vast scope' for development and employment generation.
Mr Ahmed, who is also the Chairman, Council for Leather Exports, said the State Government should look at encouraging traditional industries such as textiles and leather. These were focus industries of the Centre's Common Minimum Programme. This could be carried forward as there is potential for investments and employment generation in urban and rural areas.
In a statement, Mr S. Rethinavelu, President, Tamilnadu Chamber of Commerce & Industry, referred to the problem in industry and trade representatives interacting with Ms Jayalalithaa as Chief Minister, because of which trade and industry could not get its grievances redressed.
He hoped that the new Government would introduce VAT and also take up large infrastructure projects at the earliest.
A leading industry representative, who did not want to be named, said there would be greater cooperation now between the Centre and the State, because of which Tamil Nadu would benefit. Under the AIADMK Government, this relationship was lacking because of which the State suffered on various fronts, he said. The Chief Minister should also be more accessible to a large cross-section of the public, he said.
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