Describing the surprise tax cuts as an add-on to the already prevailing feel-good factor, the industry on Thursday lauded the move, saying the tax reduction would help make Indian economy globally competitive, and sought deepening of labour reforms.

Welcoming the announcement made by Finance Minister Jaswant Singh, Federation of Indian Chambers of Commerce and Industry president Y K Modi felt the reduction in excise duty and customs duty on computers, coal, cell phones will add to the feel good factor prevailing in the country.

He said cut in excise duty on aviation turbine fuel and abolition of 15 per cent inland travel tax would give a boost to air travel.

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However, Modi said reduction in customs duty on non-farm goods should have been done with simultaneous deepening of reforms in the area of labour and power sector.

Welcoming the move, Indo-American Chamber of  Commerce said these measures would help in giving a critical push to the economy, particularly the manufacturing sector which has been showing buoyancy in recent months.

The IACC president hoped that with these far reaching measures, steps should be taken to raise the ceiling of equity cap on foreign direct investment in sectors like insurance, telecom and banking.

CII President Anand Mahindra said the new measures would further enhance the competitiveness of the industry and 'propel India into a higher growth orbit.'

"We are delighted that the government has taken these measures," he said.

PHD Chamber of Commerce and Industry President Ravi Wig said the duty cuts will promote domestic value addition and bring down the input costs.

The government should announce a 'roadmap' for reduction in customs and excise duties to enable Indian industry to strategise, Wig said.

He also said that there was a need to make domestic industry competitive by introducing value-added tax at the earliest.

He welcomed the reduction in project import with an investment of at least Rs 5 crore (Rs 50 million) in plant and machinery as this will bring down the cost of project and the cost of production.