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    Directions: Read the following passage and answer the question given below it.

    Today the import duty on a complete machine is 35% for all practical purpose, whereas the import duty on raw materials and components ranges between 40-85%. The story does not end here. After paying such high import duties on component, once a machine is made, it suffers excise duty from 5% to 10% (including on the customs duty already paid). At the time of sale, the machine tools suffer further taxation, i.e. central sales tax or State sales taxes which range from 4% to 16%. This much for the tax angle. Another factor, which pushes the cost of manufacture of machine tools, is the very high rate of interest payable to banks ranging up to 22%, as against 4%-7% prevailing in advanced countries.

    The production of machine tools in India being not of the same scale as it is in other countries, the price which India’s machine tool builders have to pay for components is more or less based on pattern of high pricing applicable to the prices of spares. The above represents only a few of the extraneous reasons for the high cost of Indian machines.

    The machines tool industry in India has an enviable record of very quick technology absorption, assimilation and development. There are a number of success stories about how machine tool builders were of help at the most critical times. It will be a pity, in fact a tragedy, if we allow this industry to die and disappear from the scene.

    It is to be noted that India is at least 6,000 km away from any dependable source of supply of machine tools. The Government of India has always given a great deal of importance to the development of small scale and medium scale industries. This industry has also performed pretty well. Today, they are in need of help from India’s machine tool industry to enable them to produce quality components at reduced costs. Is it anybody’s case that the needs of the fragile sector (which needs tender care) will be met from 6,000 km away?

    Then, what is it that the industry request from the Government? It wants a level playing field. In fact, all of us must have a deep introspection and recognise the fact that the machine tool industry has a very special place in the country from the point of strategic and vital interest of the nation. Most important, it requests for the Government’s consideration and understanding.

    According to the passage, all the following factors are responsible for high cost of Indian machines, EXCEPT

    Options :-

    1. higher import duty on spares

    2. excise duty

    3. sales tax

    4. high profit margin 

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