Govt to set up panel on services

Govt will strive to unleash India's intellectual ability in the global market place: Nath

The United Progressive Alliance (UPA) government yesterday decided to set up a joint working group of government and industry representatives on services to make the country a global services hub.

Referring to the services sector as the "people's sector", Commerce and Industry Minister Kamal Nath told representatives from the Confederation of Indian Industry (CII) that the government would strive to "unleash India's intellectual ability in the global market place".

On the forthcoming Exim Policy, he said the aim of the government would be to liberalise the regulatory framework and "do away with what has become a prohibitory framework", said a commerce department release.

Sunil Kant Munjal, CII president-elect, demanded remission of indirect taxes and direct tax exemption for exporters.

He demanded continuation of direct tax exemptions under Section 80HHC and 80HHE of the Income Tax Act to enable Indian exporters to compete.

"Withdrawal of these benefits is not a right a step, especially since export-oriented units and units located in special economic zones are expected to continue to be tax exempted under Section 10A and 10B till March 31,2009," Munjal said.

At present, there is no provision to reimburse indirect taxes other than Customs and central excise that are levied on the inputs used in the export product.

Taxes like sales tax, service tax, Octroi and electricity duty levied by the Centre and states added up to reduce the competitiveness of exports, Munjal said.

Refund of such taxes was WTO compatible and a suitable scheme was needed to be introduced to reimburse such taxes to exporters, he added.

Munjal said India's success in exporting services needed to be built upon. In this endeavour, he said the private sector would have to work with the government.

"What we want from the government is not just incentives and schemes for export promotion but also the creation of an enabling environment that will facilitate exports," the CII official said.