Industry seeks front-loading infra spend, tax breaks in upcoming Budget

Companies are seeking clearing of dues, implementation of announced reforms, and tax breaks to aid infrastructure investment in the country. These were some of the suggestions made during Finance Minister Nirmala Sitharaman’s 12th pre-Budget consultations with representatives from the infrastructure, energy, and climate change-oriented businesses. 

To incentivise investments in infrastructure, the Federation of Indian Chambers of Commerce & Industry (Ficci) has sought tax exemptions. In their representation, the Ficci said: “Measures to revive the growth cycle, and creation of jobs are of paramount importance in the current scenario. A stimulus to investments in infrastructure can provide a major fillip to the growth engine, creation of jobs, and spurring demand.”

Specifying the support Ficci needs, the industry body said: “Erstwhile Section 10(23G) of the Income Tax Act exempted income by way of dividend, interest, and long-term capital gains arising out of investments made in an enterprise engaged in the business of developing, maintaining, and operating an infrastructure facility. Benefit similar to Section 10(23G) of the Act to incentivise investments in infrastructure may be provided in Budget 2021-22.”

The Ficci also proposed to accelerate the pace of infrastructure investments. “National Infrastructure Pipeline (NIP) is a five-year plan. We should look at front-ending the projects under NIP and try and complete 40-50 per cent of the projects in the next two years. When the infrastructure sector moves, it pulls along more than 200 other sectors. It is also a key driver of unskilled employment generation.”In their representation, the Confederation of Indian Industry (CII) sought implementation of Basic Customs Duty (BCD) on solar equipment was announced in the last Budget. The CII said the government was yet to lay down the implementation roadmap. “Delay in BCD is impacting investment decisions,” they said.

The CII also sought the government to bring power under the ambit of the goods and services tax regime and asked for a long-term policy on renewable energy. 

The industry body also called for enforcement of Letter of Credit (LC) and payment security for both renewable and conventional power generation plants. “As of September, power distribution companies’ dues stand at Rs 1.26 trillion. There were already legacy payment issues that have accumulated with the power sector running into a mid-year turmoil as the country faced the pandemic that severely affected demand.”

In addition to industry chambers, the meeting was attended by top public sector undertaking officials from Delhi Metro Rail Corporation, National Highways Authority of India, and Indian Renewable Energy Development Agency, among others. There were also representations from the Cellular Operators Association of India, the Society of Indian Automobile Manufacturers, and The Energy and Resources Institute.

The CII also sought notification on shelf-ready projects that are in the National Infrastructure Pipeline (NIP) for implementation and fast-tracking of projects nearing completion.

It also sought a special focus on low-cost housing. Currently, the government offers interest subvention of 1 per cent for low-cost housing loans up to Rs 15 lakh, provided the cost does not exceed Rs 25 lakh. They also want the interest subvention scheme to be extended to cover housing cost of up to Rs 35 lakh.