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Impact of Tax on Small Scale Industries

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Published in April 1958

IMPACT OF TAXATION ON
SMALL AND MEDIUM SCALE INDUSTRIES
BY

MURARJI J. VAIDYA

(Text of a public lecture delivered under the auspices of Forum of Free Enterprise on April 9, 1958 in Bombay. The author was Founder-Vice-President, Forum of Free Enterprise).

It is necessary at the outset to define the terms, “Small Scale” and “Medium Scale” industries because there appears to be a deal of confusion over the precise connotation of these terms. Government have defined small industries as those which employ 50 workmen where power is employed and 100 workmen where power is not employed and the industry is manually operated. In the matter of capital, the limit of Rs.5 lakhs as invested is the maximum limit to qualify an industry as a small-scale industry. As far as medium scale industries are concerned, there is no specific definition. From time to time, various figures have been given. In my opinion, industries employing up to 500 workers and with an invested capital of Rs.5 lakhs should be considered as medium scale industries in the context of present costs of putting up such factories. The Government of India, however, have not laid down any definition of medium scale industry and, I am sorry to say, that they have not taken much interest in the development of medium scale industries.

In April 1956, in my presidential address to the 26th Conference of the All- India Manufacturers’ Organisation in New Delhi, I had made a reference to the comparative neglect of medium scale industries by Government. The Prime Minister who inaugurated this Conference, confessed in his reply that the medium scale industries have not received the requisite attention at the hands of the Government of India. He added that it was not possible for the Government of India to attend all classes of industries,

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