3-phase strategy to help Indian industry

Ficci calls for time-bound implementation of key areas of reform

The Federation of Indian Chambers of Commerce and Industry (Ficci) has called for a three-phase strategy, for a time-bound implementation of key areas of reform to help Indian industry attain the desired manufacturing leadership.

Addressing a press conference, Onkar S Kanwar, president, Ficci spoke about the importance of manufacturing competitiveness for the nation and the need for targeting implementation of reforms that can be carried out within the next six months. The reforms which can be carried out in the next 12-18 months would be in phase II. The final phase would be reforms where larger political consensus is required.

In the first phase, key targets areas will be legislating for contract labour in special economic zones, export oriented units and small and medium enterprises (SMEs) involved in exports at the state or centre.

Kanwar suggested that all indirect taxes including state taxes and local levies were countervailable. Other measures could be the introduction of self-certification for environmental clearances and allowing electronic filing of records. Also, a common format for computerisation of details and issuance of clearances for new investment proposals could be there, he added.

In phase II, allowing contract labour in all SMEs, harmonisation of value added tax (VAT) rates and withdrawal of all state and local levies such as central sales tax, entry tax, octroi and guidelines to provide facilities like power, water, roads to foreign domestic green-field investors on a priority basis in states, he said.

The final phase will include reforms which necessarily require a larger political consensus such as allowance of contract labour in all industries, move towards an all India good and services tax to ensure that the total tax burden on manufactured goods is below 20 per cent and outsourcing inspections from private technical agencies.

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Targets for reform

• Phase I: Legislating for contract labour in SEZs, EOUs and SMEs involved in exports at the state or centre
• Phase II: Contract labour in SMEs, harmonisation of VAT rates and withdrawal of all state and local levies such as central sales tax, entry tax, octroi and guidelines to provide facilities like power, water, roads to foreign and domestic green-field investor on a priority basis in states
• Phase III: Will include reforms which require a larger political consensus such as allowance of contract labour in industries