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No.14/005/092/2006
March 1, 2006
Members of the Council,
Dear Members,
Sub: Union Budget 2006-07 : Highlights
As you aware, Hon’ble Union Minister for Finance Shri P Chidambaram announced the Union Budget 2006-07 on Feb 28, 2006. The Budget has provided thrust to the manufacturing and services sectors, which are having immense employment opportunities.
The general reduction in peak rate of customs duty from 15% to 12.50%, together with new levy of 4% special CVD, has resulted in net increase in the total duty incidence by 2.30% as total import duty rate has now increased from 34.44% to 36.74%.
As far as leather sector is concerned, the Budget contained two concessions in the form of CVD exemption of 16% on vegetable tanning extracts (quebracho extract and Chestnut extract), reduction of Central excise from 16% to 8% for footwear with retail sale price between Rs.250/- and Rs.750/-.
A Note on the highlights of Union Budget 2006-07 and Import duty structure taking into account changes made in the Budget are attached herewith for your perusal and reference.
At this juncture, we wish to inform you that several suggestions of the Council such as CVD exemption on machinery & equipments, lowering duty on spare parts of machinery, Central Excise exemption on footwear components etc have not been considered in the Union Budget. The Council earlier submitted detailed pre-budget proposals to the Government and the same was followed up with extensive consultations explaining the need for priority consideration. In fact, these issues were specifically taken up by the Chairman of the Council Shri M Rafeeque Ahmed in the Exporters Meeting held with Hon’ble Prime Minister Dr Manmohan Singh, and Hon’ble Minister for Commerce & Industry Shri Kamal Nath on Jan 24, 2006. It was further taken up in an another exclusive meeting of a few EPC Chairmen held with Hon’ble Finance Minister Shri P Chidambaram on Feb 10, 2006. However, these were eventually not included in this Budget.
The Council shall be reiterating all these important fiscal proposals to the Union Government for necessary reconsideration, which are very much required to meet the envisaged target of doubling the production as well as export.
Members may kindly note the above.
With regards,
Dr K Elangovan
Executive Director
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