Corporate sector makes fresh plea for labour reforms.
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The government is considering a reduction in the peak Customs duty from 20 per cent to 15 per cent in the Budget for 2005-06.
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According to indications given by Finance Minister P Chidambaram, during his interaction with industry captains today, the government is also expected to focus on job-generating sectors like infrastructure, agriculture, biotechnology and textiles.
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Chidambaram said he would hold a second round of meetings with a select group of industrialists once the finance ministry draws up the broad contours of the proposals.
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Industry leaders, in turn, sought foreign direct investment in real estate and information technology hardware, a reduction in the corporate tax rate and labour reforms.
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A team of 14 industry captains--including Mukesh Ambani of the Reliance group, Sunil Mittal of the Bharti group, Jagdish Khattar of Maruti Udyog, VS Jain of Steel Authority of India, AM Naik of Larsen & Toubro, Suresh Neotia of Gujarat Ambuja, Sunil Munjal of the Hero group and Onkar Kanwar of Apollo Tyres--who attended the pre-Budget meeting, stressed more investment in infrastructure and reforms in the tax administration to make industry more competitive.
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The meeting, however, had a few notable absentees. Tata group chief Ratan Tata, AV Birla group chief Kumar Mangalam Birla, Infosys Managing Director Nandan Nilekani, TVS Managing Director Venu Srinivasan and Biocon Chief Executive Kiran Majumdar Shaw did not attend the meeting, while other regulars like Nusli Wadia of Bombay Dyeing were not invited.
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AM Naik, CMD of Larsen & Toubro, said the inverted duty structure should be removed and duties on capital goods sourced domestically be reduced further. "I also asked the minister to remove anomalies where the import duty on raw material is higher than the finished good," he said
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Mukesh Ambani pointed out the problems in the energy and telecom sectors and asked the finance minister to remove the anomalies in the duties on petroleum products.
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Jagdish Khattar said: "The government should reduce the excise rate (on cars and two wheelers) and bring down the overall rate to 16 per cent from 24 per cent. Customs duty on raw materials should be reduced and I also asked the minister to review the retirement policy for vehicles, where there should be some incentives for phasing out old cars."
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VN Dhoot of Videocon asked the government to speed up special economic zones to attract investment. "The export concession to electronic goods industries should continue while the minimum alternate tax (MAT) and the education cess should be abolished," Dhoot said.
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Sunil Mittal said service charges were not the main problem as long as they were across all sectors and not specific to telecom, but "I asked the minister to further bring down duties on electronic components and sets."
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Sunil Kant Munjal, CII president, asked Chidambaram to identify companies and sectors that can emerge as global leaders. "BPO, textiles and automobile components should be given incentives as they have the potential to put India on the global map," Munjal said.
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FICCI President Onkar Singh Kanwar asked the ministry to bring 150 million assessees in the tax net. "We asked the finance minister to bring all services under the purview of the service tax, barring public utilities. Also, agricultural income from commercial crops beyond Rs 5 lakh should be taxed at 15 per cent flat. But, tax slabs for individual assessees and the maximum rate of 30 per cent should be made applicable to income over Rs 10 lakh," Kanwar said.
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Assocham President MK Sanghi asked the finance minister to reduce the import duty on industrial inputs and their raw materials and intermediates from the peak rate of 20 per cent to 10 per cent and the duty on final products for consumption from 20 to 15 per cent.
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India Inc's wish list
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TAX
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Reduce the corporation tax rate from 35% to 30%
Simplify M&A rules, grant tax sops for consolidation
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INFRASTRUCTURE
Infrastructure Development Board, with public-private participation, mooted
Fix targets for capital formation to fund infrastructure
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SMALL INDUSTRY
Raise the turnover threshold for excise exemption to SSI units from Rs 1.5 cr to Rs 2 cr
Provide excise exemption to branded SSI products |
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