Agarwal said that the existing VAT laws in Assam are heavily loaded against local industry. If major buyers in Assam like the Indian Railways
and big public sector industries go in for local products they have to pay Assam VAT @12.5 per cent, while if they purchase goods manufactured outside Assam they have to pay CST @ 2 per cent only. Therefore, even if the actual cost of production of an item made in Assam is competitive, the buyer prefers to buy goods produced outside Assam, since they straightaway save 10.5 per cent In taxes.
As a result of this, due to no fault of theirs, local industry is not in a position to meet the considerable local demand from public sector buyers. They added that immediate action on the part of the government is necessary to remove this major hurdle. The Assam Preferential Stores Purchase Act (APSP Act) was a big aid to local industry. Under this Act, state government departments give price preference to locally-produced goods thereby enabling many micro and small industries in Assam to survive thanks to patronage by the state government. He asserted that the Act needed to be strengthened and implemented in right earnest.
He further added that there was a scheme by Ministry of Micro, Small and Medium Enterprises (MSME), Govt of India, to give 15 per cent preference to micro enterprises over medium and large industries. But this was not sufficient to support the local industries in Assam, particularly those in the micro sector and as such he suggested that the APSP Act should be strengthened to support local micro industries. There should also be a special support provided by the Govt of Assam through their purchase programme for local industries, and specifically micro industries.
J N Barua, the general secretary of AASSIA said that the department of industries, Govt of Assam is the parent department for industries and as such categorization, decision, permission by this department should be applicable to all other government departments. It has been found that other departments like the Assam State Electricity Board (ASEB), Pollution Control Board, Sales Tax Department, and Labor Department put their own conditions for industries. The eligibility certificate for availing of various incentives is issued by the director of industries. However, in the case of sales tax exemption, the sales tax department demands a separate application for the same. This sort of duplication should be avoided for micro and small industries as these sectors are always short of manpower, he said.
Printing presses, and steel fabrication units are required to be duly registered as industrial units by the industries department and as a result they are not provided electricity by the ASEB at the concessionary tariffs applicable to small scale industries. The ASEB should therefore be directed to provide power at rates applicable to micro and small industries to any unit registered as a micro or small industry by the industries department.