The mood at the industrial unit of one of Asia’s biggest industrial hubs, Adityapur Industrial Area, is upbeat these days.

Jharkhand Government’s decision to reduce VAT on auto components from 14 per cent to five per cent has send cheers amongst the ancillaries of Tata Motors. The units had been demanding immediate reduction in Value Added Tax (VAT) rate on automobile components ever since the industry was hit by sluggish sale.

The officials of Adityapur Small Industries Association, (ASIA) said that due to high VAT rate in the State, companies like Tata Motors had started shifting production to other States like Uttarakhand, where the VAT rate is much lower. However the move of the Government is a welcome step.“We want to thank the Government of Jharkhand for taking such initiative to reduce the VAT. We have been demanding the cut from past several months. The cut has boosted the moral of the industrialists and we are looking forward for better days,” noted RK Sinha, a senior functionary of ASIA.

Officials of ASIA said that in the past months, the ancillaries have suffered loss. Due to high competition faced by the local automobile sector including Tata Motors because of high rate of VAT in the state, they are regularly taking shut downs. “The situation is really tough for us. We were pinning hopes on Government to help us. We are doing only the staff payment from the revenue that is being generated from the sale of components from the commercial and private vehicles.  It has become very difficult to meet the expenses for the rest of the liability like the electricity bills and the payment of interest. In such condition we are not able to think about undertaking the work which has become necessary,” noted an industrialist.

Meanwhile the Singhbhum Chamber of Commerce has also welcomed the move. “We had asked for 4 to 5 per cent VAT on all products including ancillary products such as engine, axil, propeller, among other items, to promote business in Jharkhand and our happy that the Government has fixed five per cent VAT,” Suresh Sonthalia, president of the Chamber.

The small and medium industry had also appealed to the Union government to announce multi-crore investment projects in the sectors like road construction (national highway) and real estate.There are about 1,100 industrial units in the Adityapur industrial area employing over 60,000 workers. The sprawling Adityapur Industrial Area houses more than 1100 units, including 11 large-scale, 64 small scale and 166 tiny industries. A few important industries that have global presence are Usha Martin Group and RSB Group.

There are 20 industries, which export its products to the USA, Australia and other European countries.