Budget 2010 to bring cheer to Agriculture, Environment and Health sectors

By TIOL News Service

NEW DELHI, FEB 26, 2010: WHEN the Finance Minister was making his Budget speech, the entire Opposition slammed the Government and walked out of Lok Sabha by dubbing the Budget proposals as anti-poor. One of the prominent reasons cited is the increase in the price of petrol and diesel. Of course, there will be an impact on the price of essential commodities if the price of diesel is enhanced. Coupled with this, there is also an increase in the rates of excise duty for petrol and diesel both branded and unbranded by one rupee per litre and a substantial increase in the basic customs duty on crude petroleum (increased from Nil to 5%), petrol and diesel (increased from 2.5% to 7.5%) and other specified petroleum products (from 5% to 10%).

However, when you proceed to read the fine print, one may notice that there are several customs and excise duty incentives doled out to sectors like Agriculture, Horticulture, Agri-processing, Environment, and Health. The farming sector and the green brigade will no doubt rejoice at these proposals.

Agriculture/Horticulture/Agri-processing Sectors:

There is a concerted effort from the Government in this Budget to promote agri-processing units which would provide a significant value addition to the agri/horticulture produce from the farming community.

To meet these objectives, the Central Government has granted project import status to the initial setting up or substantial expansion of a cold storage, cold room (including farm pre-coolers) for preservation or storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic & marine produce and meat. These projects would attract a concessional rate of basic customs duty of 5%.

Similarly, project import status is granted to installation of mechanized handling systems & pallet racking systems, in mandis or warehouses for food grains and sugar, with a concessional rate of basic customs duty of 5%. Moreover, such systems are also exempted from additional duty of customs (CVD) and special additional duty of customs.

Further, import of truck Refrigeration units for the manufacture of refrigerated vans/trucks is exempted from basic customs duty. Such refrigeration units are already exempt from excise duty. Also, basic customs duty is reduced from 7.5% to 5% on certain specified agricultural machinery such as paddy transplanter, laser land leveller, cotton picker, reaper-cum-binder, straw or fodder balers, sugarcane harvesters, track used for manufacture of track-type combine harvester etc. Concessional rate of basic customs duty of 5% provided for import of machinery or equipment meant for tea, coffee or rubber plantation sectors allowed till March 31, 2011. This is coupled with CVD/full excise exemption as well.

A complete exemption from basic customs duty is also granted to import of bio-polymer/bio-plastics used for manufacture of bio-degradable agro mulching films, nursery plantation & flower pots.

On the excise side, full excise duty exemption is extended to apiary, horticultural, dairy, poultry, aquatic & marine produce and meat as well as processing of such goods. Further, full exemption from excise duty is extended to self-loading/self-unloading trailers & semi trailers for agricultural purposes.

Eco friendly measures:

For cheering the green brigade, the Government has granted full exemption from basic customs duty and special additional duty of customs and a CVD of 4% to import of batteries including battery chargers, electric motors and AC or DC motor controllers imported for manufacturing all categories of electrical vehicles including cars, two wheelers and three wheelers. This exemption is subject to actual user condition and will be available till 31.03.2013. A complementary concessional rate of duty of 4% with a similar sunset clause is granted on the excise side as well for these goods (for both specified parts of the vehicles and the vehicles themselves).

Further, a concessional rate of 5% basic customs duty is extended to machinery items, instruments, appliances required for initial setting up of solar power generation projects or facilities. These items have also been exempted from CVD by way of complementary exemption provided to them on the excise side. Also, ground source heat pump (for geo-thermal energy applications) is fully exempted from basic customs duty and special additional duty of customs.

Similarly, there is a reduction of excise duty on LED lights and lighting fixtures from the current 8% to 4%. Also, full exemption from levy of excise duty is provided to certain specified raw materials meant for manufacture of rotor blades for wind operated electricity generators.

Further, full exemption is granted to all items of machinery, including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and components, required for initial setting up of a solar power generation project or facility subject to fulfilment of certain conditions.

Lastly, there is a proposal to levy clean energy cess on coal, lignite and peat produced in India which would be levied and collected as a duty of excise from coal mines. However, the rate of cess, the effective date, rules and procedure for its collection would be notified only after the enactment of the Finance Bill, 2010. Further, this cess would also be applicable to imported coal as ‘CVD'.