The Hindu : Business : Industry moots slew of measures to boost investment

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Wednesday, Jan 12, 2005

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Business

Industry moots slew of measures to boost investment

By Our Special Correspondent

(From left): The Chairman of Bharti Enterprises, Sunil Mittal, the Chairman of Reliance Industries, Mukesh Ambani, the Managing Director of Videocon, V. N. Dhoot, and the Managing Director of Maruti Udyog, Jagdish Khattar, during a pre-budget meeting with the Union Finance Minister, P. Chidambaram, in New Delhi on Tuesday. — Photo: Rajeev Bhatt

NEW DELHI, JAN. 11. Leading industry chambers — the Confederation of Indian Industry the Federation of Indian Chambers of Commerce and Industry and the Associated Chambers of Commerce and Industry — today asked the Government to lower income and corporate tax rates to increase the tax base from 3 crores to 15 crores, so as to boost revenues and cut the Centre's revenue deficit.

In their pre-budget meeting with the Finance Minister, P. Chidambaram, industry also proposed a number of measures that would boost investment to enable the economy to move to a higher 8-10 per cent growth trajectory. Industrialists also asked the Government to go for radical reforms, speed up disinvestment to mop up Rs. 25,000 crores annually and hike foreign direct investment limits in sectors such as telecom and insurance.

Mukesh Ambani of Reliance Industries and Maruti Udyog Managing Director, Jagdish Khattar, called for lowering customs duty on crude oil from 10 to 5 per cent. Mr. Ambani also called for rationalisation of subsidies, especially on LPG and kerosene, and make their prices market determined.

Stressing on fiscal prudence, the CII president, S. K. Munjal, said the Centre should focus on the revenue side and not on fiscal deficit. The FICCI President, Onkar Kanwar, mooted downsizing of Government as recommended by the Fifth Pay Commission and the Geethakrishnan Committee on reducing expenditure to curtail the revenue deficit. The Assocham President, M. K. Sanghi, said the budget should give a thrust to infrastructure to spur growth.

Highlighting the need for boosting exports, the President of FIEO, O. P. Garg, said the income-tax facility for export-oriented units and special economic zones should be extended to domestic units exporting more than 75 per cent of their products.

The CII proposed identification of a few industries such as textiles, auto ancillary, business process outsourcing (BPO), food processing and construction and to provide them with incentives to enable them to become globally competitive. The CII President suggested that the annual budget should be part of a medium-term economic strategy for accelerating growth.

To boost infrastructure, the suggestion was made that the Government should come up with policies for promoting FDI, establish development boards with private and public participation, and set up regulatory mechanism for roads, power, ports and airports.

The FICCI asked the Government to lay special emphasis on labour-intensive industries such as textiles, jems and jewellery and agro-processing, promote investments in cold storages and tax incentives for agri infrastructure. Mergers and acquisitions should be encouraged and made tax-friendly, exit options made easy and stamp duties should be slashed, the FICCI said.

Voicing the concerns of auto industry, Mr. Khattar said the special excise duty of 8 per cent should be abolished, sops for R&D should be extended beyond one year, customs duty on inputs should be bought down to 5 per cent and retirement age for old vehicles reduced.

On direct taxes, the leading chambers proposed cut in corporate tax rate to 30 per cent from the present 36.5 per cent and abolition of 2.5 per cent surcharge. Industry also wanted the Minimum Alternative Tax to be withdrawn, abolition of dividend tax and restoration of depreciation of 100 per cent for some of the items like energy-saving devices and 150 per cent for R&D.

The CII wanted raising of the income-tax exemption limit to Rs. 1 lakh from Rs. 50,000. Income between Rs. 1 lakh and Rs. 4 lakhs should be taxed at 20 per cent and for Rs. 4 lakhs and above, the rate should be 30 per cent.

The FICCI said income above Rs. 10 lakhs should be taxed at 30 per cent. The chamber favoured abolition of the 2 per cent education cess.

The Assocham said the service tax should be extended to more services as this segment contributed 50 per cent of gross domestic product. On indirect taxes, both the CII and the FICCI pitched for lower duties on raw materials at 5 per cent.

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