Gujarat to abolish Octroi

Vinay Dalvi

Mumbai

November 5th, 2007

The Gujarat government's decision to abolish Octroi from seven larger
municipal corporations of Ahmedabad, Vadodara, Surat, Rajkot, Jamnagar,
Bhavnagar and Junagadh will come into effect from November 15. The decision was
taken at a weekly cabinet meeting chaired by Narendra Modi on 6th June.

Kaushik Pandya, President, Ahmedabad Computer Merchants Association (ACMA)
said, " We welcome the decision of Gujarat government to abolish Octroi
from November 15. This will reduce our dealers and distributors operating cost
and manpower cost. The customers will also benefit from it, as they will be the
beneficiaries of the Octroi abolishment. Dealers will have to maintain only one
warehouse and this will reduce their costs. We were fighting and lobbying with
the help of Gujarat Chamber of Commerce and industry from a long time for the
abolishment of Octroi and this will be a win-win situation for us."

Adding to Pandya's point Ketan Patel, President, South Gujarat IT Association
(SITA) said, " The end users will benefit from the Gujarat governments
decision to abolish Octroi as they will have to pay less by 4 percent. For
dealers and distributors the harassment of Octroi and Octroi theft will vanish
and the prices will be identical everywhere. The disadvantage for us dealers in
Surat and Vadodara is that the market will be opened to dealers and distributors
of Ahmedabad and they will enter small towns and create more competition for
us."

"We earlier had two people appointed only for Octroi and bringing goods
from our warehouses that were not in the Octroi jurisdiction. Now that Octroi
will be abolished people can work on other aspects of the business and this will
reduce our costs," said Baroda Information Technology Association's (BITA),
Immediate President, Amit Shah. Shah further added, "Though the competition
will increase because players from Ahmedabad will enter the Baroda market, our
relationships with our dealers will surely help us to gain business. For end
consumers it will be good pricing as the number of players will increase."

When Gujarat abolishes Octroi, Maharashtra will be the only state in India
that will be having Octroi. Presently Gujarat Government earns revenue of Rs
1,800 crore by Octroi itself and this revenue increases by 20 percent every
year. On the other hand Maharashtra government earns revenue of Rs 5,500 crores
by Octroi and there is a growth rate of 20 percent in this every year.

Champakraj Gurjar, MD, Maxtone Electronics said, " If Octroi is
abolished from Maharashtra the dealers will not have to stock their goods in
place's like Vasai. They can have their warehouse in nearby places. The gray
market activities will also reduce significantly with the abolition of Octroi.
This will be justice done for honest people who pay Octroi as the prices will be
the same throughout the market."

Recently the Chief Minister of Maharashtra, Vilasrao Deshmukh announced that
the government would abolish Octroi in just two months for Maharashtra except
the city of Mumbai. Umang Mehta, spokesperson for Traders Association of
Information Technology (TAIT), Mumbai said, "The government of Gujarat's
decision is a welcome one that will help Gujarat to progress and grow in the
future."