The Confederation of Indian Industry (CII) has advised Uttar Pradesh to formulate a policy that encourages investment in cutting edge research and technology.
While it wants the current schemes of incentives to continue till their expiry because they have been incorporated into the various projections, CII is set against industry relying too much on concessions.
According to CII, the impact of long-term incentives has not been encouraging. They have led to the creation of an inefficient and consequently incompetitive industry.
Also Read
It wants the state to phase out all tax-based and other fiscal incentives.
Uttar Pradesh must emphasise technology upgradation, quality improvement and productivity, besides infrastructure development, so that the industrial units of the state can face global competition, said CII.
To achieve the above, the CII memorandum submitted to the state government advocates beefing up research and development (R&D) facilities, modernisation of the existing units and strengthening testing and calibration facilities in order that more units are in a position to compete with international standards and find export markets for their products.
The R&D institutes should be linked to technical training programmes, summer training of students and technology development of industrial projects.
Meanwhile, CII (Northern Region) has urged the state on implementing VAT. It has asked the government to re-prioritise expenditure so that more money is allocated towards creation of capital assets that enhance social and economic infrastructure.
In a pre-Budget memorandum to the state government, CII has asked it to design the legislation on VAT and notify the Act in the forthcoming Assembly session. The rules should be issued at the earliest, it said.
It has emphasised that the step is crucial, in order that industry might get time to adjust to the new Act. Besides, it pointed out, training and orientation of officials was necessary, along with computerisation of the system.
The CII has expressed concern over the deteriorating financial situation of the state, with the share of development expenditure on the revenue account going down from 50 per cent in 1999-00 to 45 per cent in 2001-02.
The expenses on legislature and the Cabinet have risen three-fold in the course of a single year. Administrative services incur more expenditure than power and irrigation combined.
In the last decade, debt and interest payments have risen far more then revenues. Nearly 30 per cent of the revenue receipts are spent on the payment of interests.
More and more capital receipts are being consumed in fulfilling the revenue expenditure and hardly any resources are left for the creation of social and economic infrastructure.
Picking out several segments, CII-NR has also said that the duty on gensets should be reduced to 8 per cent, and on raw material and components to 4 per cent each, which it says is comparable to other states.
Local sales tax should be withdrawn from the IT policy or reduced to 4 per cent, and this should also include the telephone cable industry, it said.
The entry tax of 3 per cent on capital goods should be abolished.
It has also suggested that Form 31 be abolished. In other states, there is no provision of the form.
Due to the high stamp duty and registration charges, buyers of property evade registration. CII said the charges should be brought down to 2 per cent, which would reduce the black money component and lead to more revenue for the government.