The Hindu : Business : Govt. support sought for overseas acquisitions

Online edition of India's National Newspaper
Wednesday, Jan 10, 2007
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Govt. support sought for overseas acquisitions

Special Correspondent

Industry wants corporate tax cut to 25 per cent

— Photo: R. V. Moorthy.

PRE-BUDGET EXERCISE: Finance Minister P. Chidambaram with industrialists (from right to left) Ratan Tata, V. N. Dhoot, Sunil Bharti Mittal and others during a pre-budget meeting in New Delhi on Tuesday.

NEW DELHI: Industry leaders on Tuesday sought the Centre's assistance in cross-border acquisitions. The crucial demand has been voiced at a time when the Tatas are battling to acquire Corus, the UK-based steel major, and Videocon is engaged in a tussle for Korea's Daewoo Electronics.

Speaking to newspersons after the captains of industry had a pre-budget meeting with Finance Minister P. Chidambaram, the Associated Chambers of Commerce and Industry of India (Assocham) President, Anil. K. Agarwal, said: "We want the Government to extend political, social and financial incentives while corporates engage in acquisitions abroad."

V. N. Dhoot, whose company, Videocon, is engaged in a takeover tussle with Daewoo's creditors, pointed out that some benefits could be given to Indian companies which were in the process of going global. "These benefits can be in proportion to the capital investment being made by them across the world,'' he said.

Among the other major demands ahead of the budget, industry wanted the corporate tax rate to be slashed to 25 per cent from the current level of 30 per cent. Another demand was for tax exemptions on R & D for another ten years and be extension of the benefit to other industries, besides pharmaceuticals and automobiles.

Asked by Mr. Chidambaram on ways to attract investment into the infrastructure sector, Mr. Agarwal suggested personal income-tax exemption on investment of up to Rs. 1 lakh in long-term infrastructure instruments.

For biotechnology, Biocon Chairman Kiran Majumdar Shaw sought withdrawal of service tax on clinical trials. Clinical trials, she said, were not a service and there was no rationale to put in putting them under the tax net. She also wanted duty exemptions on kits of infectious diseases on the lines of HIV kits.

The Chairman of Bharti Enterprises, Sunil Mittal, wanted a uniform tax structure on different components and parts of equipment required by the telecom industry, while steel-makers wanted a cess of Rs. 500 a tonne to be imposed on iron ore exports so as to enhance supply of the raw material to the domestic steel industry.

Industry captains also wanted certain fiscal sops for MNCs in a bid to lure them to set up their headquarters in India.

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