Industry captains yesterday suggested a package of "pro-growth measures" to the government to beat the current recessionary trends.
The package includes sector-specific fiscal reliefs, activating trade financing schemes, treating direct housing loans up to Rs 20 lakh in urban and metropolitan areas as priority sector lending and relaxation in the existing 40 per cent ceiling on domestic funding for infrastructure projects.
The package, evolved at the end of a four-hour meeting between industry leaders, heads of financial institutions and banks and finance ministry representatives, also has some measures to boost exports, including creation of a separate banking set-up to help export-oriented small scale and allied agricultural units, income tax exemption on profits from project exports as well as net interest earnings on export finance by banks.
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It also includes allowing banks to finance stocks kept at overseas warehouses up to one year instead of the 180 days at present under pre-shipment credit schemes.
The "package" prepared at the meeting organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) will be submitted to the finance minister.
The industry package also demanded doing away of the group approach by financial institutions and banks for financing and relaxation of non-performing asset criteria by factoring in industry-specific problems.
Industry leaders also demanded that banks and FIs be given freedom to take decisions on their own "as they have achieved high standards and operational maturity".
On the infrastructure front, the package suggested exemption of long-term funds raised by banks for infrastructure financing from CRR and SLR requirements and exclusion of advances to infrastructure projects from the computation of net bank credit to avoid the implication of priority sector financing.
Pointing out that a clear and comprehensive policy framework from government is a prerequisite for enabling funding of projects in the power, telecom, road and port sectors, the package suggested the need for a regulatory framework for securitisation through the Infrastructure Development Finance Corporation (IDFC) for loans by FIs and banks.
On re-activating the capital market, the industry package suggested more stringent and transparent regulations and a better monitoring mechanism. It also highlighted the need to examine participation by the Unit Trust of India and other mutual funds in equity support "selectively".
On the export front, the package suggested a paradigm shift in the approach to improve India's share in the world market from the current level of 0.6 per cent. For this, it suggested a strategic move, including change in the export basket designed to improve the percentage of value-added items (brand equity) and expansion of market to other places.
Pointing out that the housing sector has the highest multiplier effect to trigger demand and help revive economy along side infrastructure spending, the package suggested to banks to come out with finance-structured schemes to suit builders for both residential and commercial complex in urban and metropolitan areas. It also suggested that RBI should permit banks to finance Housing Finance companies for onlending up to Rs 20 lakh to individuals at existing concessional rate. It also demanded rationalisation of stamp duty by state governments and raising of the ceiling on exemption from income tax on interest payable on housing loans from the present level of Rs 15,000 in tune with increased costs.