Calling for greater cooperation among business communities in India and South Africa, Indian high commissioner to South Africa Satyabrata Pal on Wednesday said Indian investors can invest in banking, IT, energy and mining sectors in Africa."Trade between India and South Africa has grown but the pace of growth needs to be accelerated to give a fillip to trade in the region," he said while speaking at interaction with the business communities from India.

Organised by the South Indian Chamber of Commerce and Industry, the meeting deliberated on bridging the "information gap" as also identifying the problems faced by Indian business community while investing in South Africa.A delegation of six ministers from South Africa will visit India early next year to tap the Indian investment for the region, he said, adding, "Our target is to achieve a business of $5 billion by 2007."

Mr Pal said the South African government was "politically committed" to achieve greater export-import activity between the two countries and was looking up to India for trade and development.On the lack of direct flights to SA, the high commissioner said a proposal in this regard had been given to the aviation ministry.

The tobacco industry in India has urged the government to exempt it from paying value-added tax (VAT) claiming that it would be a "retrograde step".Instead it has sought the continuation of single-point central taxation, saying that the single-point taxation would be simple to administer and would be transparent. The industry, says in a white paper, that as of now, tobacco, sugar and textiles had been left out of VAT, as these were categorised as goods of "special importance" to various states.

But with VAT being expected to be implemented by all the states by 2006-07, the tobacco industry, including manufactured tobacco like cigarettes is also expected to come under VAT in due course.
VAT was implemented in most states from April this year. According to the white paper, there are several reasons why the cigarette industry believes that it should not come under VAT. "It will be a retrograde step that will again bring to fore the disadvantages of the ad-valorem structure and result in a high cascading of tax.

VAT is supposed to eliminate tax on tax. But the imposition of VAT on a product like cigarettes, which have a high excise tax component, and do have any tax credit given for payment of excise tax on inputs, will lead to tax on tax.Hence the spirit of VAT will be violated.

"Imposition of VAT may not help states raise revenues because cigarette demand is elastic. A price increase will not lead to lower consumption of tobacco per se, but lead to users shifting to cheaper alternatives of tobacco such as gutka, chewing tobacco, biris, etc. This could affect industry performance and also result in revenue loss to the exchequer," the white paper claimed.It said there was also the possibility that different states could have different rates of VAT for cigarettes, leading to a situation where states had their own VAT.