Customs duty cut not enough to contain inflation: CII

New Delhi, Jan 23 (UNI) The Confederation of Indian Industry (CII) today said the cut in customs duty, which became effective from yesterday, will be easily absorbed by the industry and other measures are required to be taken to contain inflation.

''Bold decisions are required in the form of interventions to contain agricultural commodity prices, which is the main cause of inflation,'' CII President R Seshasayee said.

From the latest inflation figures, it is very clear that it is being fuelled by a steep rise in prices of certain food items. At 9.6 per cent increase in prices of food items, clearly the pinch is from these items for the average consumer, Mr Seshasayee said.

''Therefore, it is quite uncertain as to how much of an effect the customs duty cuts for certain industry items would have in easing the plight of the common man,'' he said.

The government had yesterday slashed customs duty on cement, raw materials and capital goods to reduce cost of manufacturing and infrastructure development in order to check inflation.

The customs duty on capital goods and parts as well as winding wires was reduced to 7.5 per cent from 10-12.5 per cent earlier.

Project imports would also attract a 7.5 per cent duty as compared to 10-12.5 per cent earlier.

A concessional project rate of 7.5 per cent was extended to airport development projects and metro rail projects. Earlier rate of 12.5 per cent on portland cement was scrapped.

On inorganic chemicals like halogens (fluorine, chlorine, bromine, iodine), sulphur, carbon, hydrogen, rare gases (nitrogen, oxygen, silicon, phosphorus), and alkali metals (sodium, calcium) and carbon black feedstock, the customs duty had been cut by half to five per cent.

Pipes and tubes of aluminium, copper and zinc (heading 7907) would attract 7.5 per cent duty as against 12.5 per cent earlier.

The rate on calcim alumina and refractories was cut to five per cent from 7.5 per cent.

In metal segment, duty on primary and semi-finished forms of copper, aluminium, zinc, tin, other base metals, ferro-alloys stainless steel and other alloy steel was reduced to five per cent from 7.5 per cent.

The CII President said that in the medium to the long term the whole issue of supply side shortages would have to be addressed in a comprehensive manner, since reduction of duties can only serve as short-term responses to a price situation.

It is well known that the entire agricultural sector and particularly the foodgrains sector is suffering from stagnation, even while growth in other sectors are driving per capita income and demand to grow at a rapid pace. ''This is a very serious issue and needs a comprehensive response from the government. Only then would we have addressed the need of the hour,'' he added.

UNI