Union Budget should provide convenient environment for persistent growth: CII

"While the economy is showing strong signs of recovery, this would be the right time to focus on future challenges such as developing a competitive manufacturing sector and climate change," TV Narendran, President, CII, said.

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Union Budget should provide convenient environment for persistent growth: CII

The Confederation of Indian Industry (CII) has strongly urged the Centre for the forthcoming Union Budget 2022-23,  to continue its investment focus and increase capital expenditure in fields like infrastructure to promote growth in the economy at a time when the consumer demand has not picked up adequately. “While the economy is showing strong signs of recovery, this would be the right time to focus on future challenges such as developing a competitive manufacturing sector and climate change,” TV Narendran, President, CII, said.

Also Read: CII urges Govt to consider 100% FDI in multi-brand retail trade

He applauded the positive interventions made by the government during the last few months such as the creation of the Development Finance Institutions (DFI), the new public procurement guidelines, and the commitment towards high public expenditure to kick-start the virtuous cycle of investment. He urged the Centre to consider replacing bank guarantees with surety bonds and to also develop the municipal bond market so that urban local bodies can raise funds for investing in infrastructure. It also sought clarification on the tax treatment for the Hybrid Annuity Model (HAM) of construction contracts, according to the press release.

“CII has strongly pointed the promotion of manufacturing as one of the priorities to provide a boost to the economy. Given the high cost of doing business, the effective rate of tax is still high. For example, in mining, the tax rates in India are highest in the world; when all the levies imposed by the Central, State, and local governments, are accounted for. This should be addressed in the forthcoming Budget,” the release said.

Highlighting the procedural complexities and the large number of permissions that are required for the implementation of projects resulting in time and cost overruns, the CII said that there is a need to address the problem. “Projects should be allowed to proceed based on self-certification followed by audits. This would provide support to avoid project delays,” it said. The future of manufacturing depends on technology advancement, the CII suggested setting up a technology fund on a PPP basis with matching contributions from the private and public sectors. This would be more effective than the exemption provided on research and development expenses, “which did not yield any significant results”. CII also stressed the necessity of policy reforms for boosting employment and sustainability, to address the imperatives of development. On employment, the CII has suggested incentivizing employment-intensive sectors such as tourism. On sustainability, the CII recommended a policy framework for transitioning towards decarbonization-wherein high taxation could be considered for high carbon products and vice versa.

“Industry should be incentivized to transition to low carbon products; production of renewable energy products should be rewarded and for hydrogen should be developed as an alternative fuel, companies should be provided with investment allowance for investing in installing electrolyzers,” the CII said. To help the Indian industry become globally competitive, the CII has suggested that all export products should be covered under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and the RoDTEP rates should be reviewed and enhanced and should be commensurate with the actual embedded/ unrefunded taxes and duties.” RoDTEP benefits should also be provided to the SEZs,” they said.

The difference between tax rate on dividend income needs to be addressed, the CII said and added that the tax rates on dividends for residents should be brought down to maintain parity with non-resident investors. “The start-ups have emerged as a conduit for entrepreneurship and innovation. To attract domestic investments into start-ups, the government should consider reducing the percentage of Long-Term capital gains from 20 percent to 10 percent and abolish the surcharge on investments made into start-ups by investment vehicles,” it said.

“Similarly, the process of issuing income tax refunds to start-ups should be accelerated. Further, relaxing the tax on capital gains arising on exit would be a key move in attracting funds into the Start-Up sector, according to CII,” it added.

According to CII, the new dispute resolution scheme (“DRS”) introduced in the Finance Act 2021 for resolving specified disputes in relation to specified Taxpayers in a faceless manner involving dynamic jurisdiction should be made available to a broader category of taxpayers. CII has also pointed to ensuring a stable and predictable tax regime to help attract private investments, both domestic and foreign.

Source: Business Standard, Livemint

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Union Budget should provide convenient environment for persistent growth: CII
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"While the economy is showing strong signs of recovery, this would be the right time to focus on future challenges such as developing a competitive manufacturing sector and climate change," TV Narendran, President, CII, said.
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THE POLICY TIMES
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