ASSOCHAM President Dr.Niranjan Hiranandani today said that concerted efforts by the Hon’ble Prime Minister Shri Narendra Modi himself in his outreach to wider sections of the industry and other key stakeholders, fiscal incentives and sustained public investment on infrastructure will lead to a spur in demand and will be big catalyst for reviving the growth momentum in the economy.
However, he said, that the industry has certain expectations and hopes on various fronts from the upcoming budget for it to be able to play a galvanising role in the economy and the nation’s development at its full potential and also help achieve the larger target of a $5 trillion economy in the next few years.
As per Dr. Hiranandani, Industry Inc. was looking forward to some bold measures in key areas of concerns as follows:
- Ease of Doing Business – Though India’s ranking in Ease of Doing Business has improved at the national level, many states need to catch up by addressing ground-level constraints and simplifying the approval process. India needs judicial reforms which can help in greater contract enforcement in the country. Also needed is faster allotment of land/sheds/warehouse obtained from the government (fix timeline, online tracking of application, including Surrender of land). Digitisation of land records is a long pending issue and we recommend a time-bound policy for the digitisation of land records.
- MSME Sector – MSMEs are the front end of the economy and reflect the picture of the overall health of our country. However, their viability has been hit on multiple ends such as High Cost of Capital, Poor Credit access, Poor infrastructure, lack of connectivity to the market, etc. We should have a dedicated index of MSME’s Ease of Doing Business. The reduction in income tax rates announced by the Government for corporate entities should also be extended to all MSMEs registered as Proprietary or Partnership concerns. MSMEs that provide a high level of employment should be given financial incentives or specific tax rebate which can be linked to the new employment created by them.
- Manufacturing – Import substituting products, which attract new investments for manufacturing in India, should be kept outside the ambit of the free trade agreement. Industries generating employment of 50 people & above for every 1 crore of investment, should be treated as a high priority sector. Encouragement is needed for industries investing in adopting digitization of operations by giving interest or capital subsidies on systems and equipment. There is a need to recognize companies having 20% + women employment, by providing an overall tax rebate of 1%.
- Export Competitiveness – To improve export competitiveness there is a greater requirement of stability in policy for at least 3-5 years. The industry is eagerly waiting for the interaction on the new scheme- Rebate of State & Central Taxes and Levies Scheme (RoSCTL). For competitive interest rates for exporters Govt’s intervention is required, to avoid the ongoing delay in implementation. The infrastructure sector has a big role to play in achieving the target of a $5 trillion dollar economy. The post ILFS bond market has not improved. We need to have marketed for long term bonds, where pension funds can invest.
- Telecom Sector – The Sector has been going through financial stress in the last 3 years. The recent AGR judgment has further aggravated the stress and leads to an unprecedented financial crisis. The majority of companies holding ISP/NLD/ILD/VSAT license have become a victim of this judgment because of the definition of Gross revenue in their license. While respecting the judgment of the Hon’ble Supreme Court, we urge the Government to intervene to avoid the unprecedented situation across sectors. It is absolutely imperative to address the AGR issue to ensure the continuity of business, investment in the sector and to meet the vision of ‘Digital India’. TRAI has already recommended a reduction of Universal service levy by 2% – this recommendation may kindly be accepted and implemented. The balance license fee may be brought down to 1%. Steps may also be initiated to review the definition of AGR prospectively.
- Agricultural Sector – Improving farmers’ income by exempting leasing services for farm equipment and machinery from GST and provision of income tax. To infuse high-end technology in farming, create the Technology Up-gradation Fund (TUF) for agriculture to provide a capital subsidy. Accord infrastructure status to the agriculture value chain to widen the spectrum of funds availability.
- Financial Sector – Most NBFCs are under a huge liquidity crunch, which has a direct impact on the economic activities resulting in financial pressure and slowing down businesses. The Finance Minister, with support from RBI, needs to create a professional panel to address the situation on a war footing. Allow large non-banks to convert into banks. They will be able to serve their target clientele (MSMEs, informal sector, etc); Promote ‘nationalist banks’ with initial ownership of even 100% to be reduced gradually n to 26% over a given period of time; Revisit Section 29A of the Insolvency & Bankruptcy Code (IBC) which prevents a promoter from bidding for his stressed company is a must.
- Road Transportation & Electric-Mobility – A single nodal agency should be authorized to deal with all issues and problems of this sector. The subsidy of INR. 22,000/- should be permissible for all Electric Two-wheelers, otherwise, the price will go high and the customer will not consider Electric vehicle as their priority. This amount of subsidy was available under FAME-I. The same should be continued for one more year so that old inventory is cleared. A consumer should be allowed to avail of Income-tax benefits on EMI or financing cost of E-Scooters/4 Wheelers. Retail financing for all Electric vehicles to be supported through government subsidies interest rate at PLR rate.
- Healthcare Sector – Ensure the reach of healthcare to the masses by the expeditious roll-out of Ayushman Bharat to Universal Basic Health Coverage. Bringing health infrastructure development to the rural area by promoting the PPP model. Allow refund of accumulated unutilised input tax credit related to ‘input services’ to entities manufacturing life-saving vaccines (liable to GST @ 5%) considering the working capital blockage and increase in cost. Specific relief should be granted for life-saving vaccines, provide clarity about the applicability of GST exemption accorded to local authorities in relation to functions entrusted under Article 243W / 243G of the Constitution of India, to private/public entities or charitable trusts who undertake waste management activities and preservation of the environment.
- Education – Partially exempt GST on outsourced services in Higher Education from 18% to 5% to create low-cost educational institutions that offer services at all levels – primary, secondary and higher education. Make education loans more affordable by reduction of interest rate from 12% to 5% and an increase in repayment tenure from 5 to 10 years. A scheme of the same magnitude as Ayushman Bharat should be designed for Education for All. Raise income tax deductions for the industry under section 80G for donations made for education from the current 50% to 100% to incentivize education-oriented donations. Foundations established by the industry and running their own educational institutions should also be extended this benefit to allow for greater fund availability that can be utilized for quality building.
- Direct Tax-Related Issues – The max cap of tax rates for the salaried individual should be kept at 25% keeping in mind the reduced corporate tax rates and to provide a boost in consumption by giving more money in the hands of individuals. Further, all allowances and deductions for e.g., conveyance, etc. should be indexed as per cost of inflation notified for capital gains, since the date of their introduction. The benefit of a lower rate of corporate tax (25%) should be allowed to newly incorporated companies based on the turnover/ gross receipts threshold in the year of incorporation/ commencement of business. Limitation of 15 years period should be removed to provide respite to companies to utilize their accumulated MAT credit.
- GST – Reduce GST rate across all slabs by 25% as it will encourage more businesses to pay tax which will lead to generating more revenue due to expansion of the tax base. Petroleum products are currently out of the ambit of GST due to which the local or inter-State taxes paid on their purchase constitute part of the operational cost of the business, as an input tax credit of such taxes is not eligible. Hence, petrol and petroleum products should be brought under the ambit of GST.Option for availing ITC to all business: The option for availing input tax credit should be available to all the businesses so that the credit chain does not get blocked.
- Real Estate Sector – In case of stressed assets, vide circular dated June 2019, RBI permitted banks to restructure and/or roll over the loans at their option and in such cases the borrower will retain the asset classification of the restructured standard accounts as standard and the same will not be treated as NPA. However, the benefit of the said Circular has not been available to the Real Estate Sector. The banks and Financial Institutions should be given discretion to one-time restructuring and/or rollover of their existing loans to Real Estate Sector on the lines of loans to other sectors. To overcome the huge housing shortage in the country, the restriction imposed on investment of sale proceeds on acquiring two residential houses should be removed and scope of broadened to exempt capital gain tax if the sale proceeds are invested in creating three or more housing stock.