First Industry-Ministry Meeting Shows Positive Signs For India Inc.
The new government in India, seems to have an impressive beginning among the India Inc. This ‘impressive start’ can be termed by a statement made by Ajay Shriram, President of CII, after his first meeting with Ms Nirmala Sitharaman Minister of State for Commerce & Industry and Finance & Corporate Affairs.
Soon after meeting the Minister, Shriram stated, “The eye for detail and quick responses by the Minister are very impressive signs and as CII we are most encouraged by her assurances. Industry has huge expectations from the new government, especially the Hon’ble Minister, we know that we have a guide and mentor in her.”
Alluding to some of the points made during the meeting, Shriram also said, “CII has suggested that there is a need to balance the need for fiscal prudence and stimulating growth in the forthcoming budget. All avenues of raising non-tax revenue would have to be explored. Especially important would be raising Rs 50000 crores from disinvestments and saving another Rs 50000 crores from subsidy rationalization. CII has also pointed out that there are 67 sick PSUs, whose winding up or rehabilitation proposals are with the BRPSE, and their assets need to be unlocked to strengthen the country’s fisc.”
The CII delegation led by Ajay Shriram, President, CII, comprising of senior industry leadersmet the minister.The delegation made a number of suggestions to the Minister for her consideration.
The CII delegation opined that if manufacturing has to reach the stated target of 25% of GDP by 2022, several measures must be taken now to kickstart it through demand creation, attract investments and making exports competitive.
Tax related measures that were suggested included: (i) Reduction in excise duty rate and extension of short term stimulus to all capital goods upto March 2015; (ii) Allow 25 percent accelerated depreciation for investment in plant & machinery; (iii) Correction in inverted duty structure; (iv) To boost investment in manufacturing sector, the threshold limit of investment allowance should be reduced to Rs. 50 crores which would encourage mid-sized companies to participate as well. The quantum of deduction should be enhanced to 25 percent. Investment allowance should also be eligible for relief under MAT provisions to avoid rendering this benefit notional.
Chandrajit Banerjee, Director General, CII commented on this first meeting, “The Ministry already has done transformational work in putting in place the E-Biz portal for single window clearances. However, this initiative needs traction, as inter ministerial coordination and synergy are important to make this a success. CII has requested the Hon’ble Minister to look into this.” Elaborating further on the discussions, Mr Banerjee said that “CII has made concrete suggestions for the revival of the manufacturing sector, especially in the context of ease of doing business and fiscal measures. In order to strengthen investor sentiment, CII has recommended that retrospective taxation issue be resolved and GAAR be postponed for 3 years at least. CII has also suggested that in its present form DTC should be done away with and fresh thinking be done for simplifying the direct tax framework.”
“CII has met a large number of foreign officials and business leaders in the last one month, in India and abroad and there is a very keen interest in India. Therefore, we have suggested to the Hon’ble Minister to leverage this opportunity” said Banerjee.
Keeping in mind the direction given by the Prime Minister, the CII delegation proposed the idea of creating Mass Manufacturing Units in sectors like Textiles in a PPP mode. These Units could be located in DMIC and would offer prior approvals and essentially create large scale employment.
Members felt that India should seriously move towards an export led economy and that incentives should be linked to export growth and value addition. Industry also urged the Government to review FTAs and analyze benefits to India vis a vis other countries as there seems to be a sense that India has not benefitted as much as those who wished to enter India.
CII also urged the Government to re-look at the land acquisition process which is lengthy, difficult and impeding large investments.