The Associated Chambers of Commerce & Industry of India
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Build Climate for Investments, Continue Reforms, Fine-tune SME Rules: ASSOCHAM in pre-Budget Meeting

 

Tuesday, June 11, 2019


New Delhi, June 11, 2019:
Participating in the pre-Budget meeting convened by Finance Minister Mrs Nirmala Sitharaman, ASSOCHAM President Mr B K Goenka today recommended more favourable norms for investment – both domestic and FDI. On behalf of industry, he made various suggestions which would help the Indian economy achieve its objectives of high growth and inclusive development.
 
Mr Goenka recommended that 100% depreciation should be permitted in the first year of investment for all new investments, be they FDI or domestic, which is the need of the hour and will create more traction for FDI. He further added, ''After dismantling of FIPB, FDI proposals are dealt with by the concerned sectoral ministry. This is causing significant delays in the approval process. Therefore, it is suggested to have a similar central/ nodal agency/ single-window for such cases. A dedicated desk for Japan has been very effective. We suggest a similar country-specific desk be set up for major FDI source countries.''
 
In view of its importance for job creation and given the fact that SMEs constitute about 1/3 of GDP, almost 50% of exports and employ about 11 crore people, it is not desirable to merge a few small units into a larger unit, as it may be counter-productive in the Indian context. As an alternative, we would like to suggest that the definition of small units be changed in line with global practices, based on turnover / employment. We recommend a large anchor unit with various smaller ancillary units which when working as a single ecosystem, would achieve economies of scale and demonstrate the effectiveness of a larger unit. An example is the ancillary units of an automobile company''.
 
Mr Goenka said the FDI in the key sector of mining also be made appealing. '' Although 100% FDI is permitted in mining sector, there is need for rationalizing and streamlining the incidence of tax rate''.
 
With a view to giving impetus to Make in India, there should be tariff protection for domestic output. The current tariffs are already at benchmark level. Any further reduction below the benchmark will be harmful for the domestic raw material sectors /input provider. ''We suggest rationalization of inverted duty structure''.
 
Giving inputs for GST fine-tuning, the ASSOCHAM President said a lot of embedded taxes still remain in certain industries which are not covered under GST for which input tax credit is not available, resulting in increased cost of the product. For boosting exports, the Indian exporter needs to be made globally competitive. A suitable scheme needs to be devised for refunding embedded state and central taxes and levies across all sectors.
 
Mr Goenka said corporate tax should be reduced by 5 % contingent on reinvesting in capital expenditure the amount of tax saved over a period of 24 months. Energy, particularly gas, is an important utility for manufacturing. It should be brought under GST.
 
“In order to further simplify GST, we propose a dual rate (8% & 16%) structure for GST''.
 
Mr Goenka also highlighted that Environment which is a growing concern and a key agenda of the Government manifesto should be given due emphasis. Today, maximum pollution is generated by 2 & 3 wheelers. Therefore, banks should be advised to provide loans for purchase of e-vehicles as priority sector lending, and 100% tax exemption should be provided on the interest component of the loan for 5 years.
 
In the context of the real estate sector, the ASSOCHAM suggestions included a scheme where developer should get option to rent out unsold inventory. And the rental income should be taxed at flat 10%. Capital gains from sale of house property should be exempt when invested apart from property in any business setup.
 
 
About ASSOCHAM:

ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org
 
For further details, please contact:
 
Manju Negi
AVDHESH SHARMA   
ASSOCHAM
ASSOCHAM   
011-46550509; +919810910911
011-46550508; +918527639419
 

 

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