Manufacturing the key: CII

'12% growth in manufacturing sector must to achieve 9% GDP target'.

The manufacturing sector has to grow at more than 12 per cent for the gross domestic product (GDP) to grow at 8-9 per cent on a sustainable basis, the Confederation of Indian Industry (CII) has said in its pre-Budget memorandum to the finance ministry.

Achieving that growth required that the constraints in five key areas "" infrastructure, labour laws, cost and access to credit, technology and skills development "" be removed, said the memorandum.

Recommending privatisation of public sector enterprises to fund infrastructure development, the industry body has asked for robust and autonomous regulatory mechanisms and creating an Infrastructure Development Board with state branches.

It also suggests that there be an annual target for gross capital formation in infrastructure which should be announced publicly to help monitor progress and achieve real results.

Asking for a total dismantling of the inspector raj, the memorandum asks for contract labour to be allowed in non-core sectors and that the IDS Act be made applicable to only units with more than 1000 workers.

The memorandum suggests establishing technology upgradation funds schemes (TUFS) for all manufacturing sectors and allowing a weighted deduction of 150 per cent for all in-house R&D expenditure and R&D commissioned by private firms to academic institutions and public sector laboratories.

Complete de-licensing and decontrol of all segments of the education sector, establishment of multiple private sector accreditation agencies and fiscal incentives for corporate investments in skill formation and education are some of the other suggestions.

Recommending a single corporate taxation rate rather than many cesses and surcharges, the industry body has recommended that fringe benefit tax (FBT) be abolished, and alternatively, tax-paying firms should be given the option of paying 1 per cent additional corporate tax.