NEW DELHI: Industry bodies have sought continued thrust on capital expenditure (capex) in their proposals to the Finance Ministry for the upcoming interim budget to be presented by Finance Minister Nirmala Sitharaman on February 1.
The Confederation of Indian Industry (CII) has asked for an increase in capex by at least 20 per cent to Rs 12 trillion from last year’s allocation of Rs 10 trillion. “Although lower than the growth rates in the last three years, this is higher than the pre-pandemic 12 per cent annual growth between FY16 and FY20,” it said.
Echoing similar views, the Federation of Indian Chambers of Commerce and Industry (FICCI) in its budget proposals said the government should maintain focus on investments, though growth has been robust so far, with the gross fixed capital formation to gross domestic product ratio estimated to have risen to a decadal high at 34.9 per cent in FY24.
“India is at an important inflection point and given the current global developments and associated headwinds, the government should continue to lay major thrust on public capex (on physical, social, and digital infrastructure) in the forthcoming budget,” said FICCI.
CII urged the government to expand the central support to state capex, in the form of an interest-free, 50-year loan, by about Rs 30,000 crores, to Rs 1.6 trillion. “Some of the support could be linked to undertaking reforms by states,” it added.
While FICCI asked the government to consider extending the concessional tax regime for manufacturing operations for at least five years as many global investors are considering investment in India, and extending such a concessional tax regime for five years will ensure stability and certainty, thus bolstering the confidence of investors to set up manufacturing units in India.
Earlier, the Finance Act 2021 had extended the sunset date under the concessional tax regime of Section 115 BAB by only one year to 31 March 2024.
“Also, the benefit of the concessional rate of tax of 10 per cent of income by way of royalty in respect of a patent developed and registered in India be also extended to the sale of patented products manufactured in India. This will indirectly encourage ‘Make in India’ and align with the Government’s policy of making India an attractive destination for manufacturing,” FICCI said.
Further, FICCI also recommended that the 90-day limit for classifying overdue of MSMEs should be increased to 180 days so that MSMEs are not constrained to divert their working capital towards servicing their loan instalments and clearing their overdues at the cost of normal business operations.
On the other hand, CII in its proposal asked the government to launch a National Mission for Advanced Manufacturing to enhance quality and productivity in manufacturing, as it would help in building a technologically advanced manufacturing industry and accelerate the adoption of transformative technologies in the manufacturing sector.
“Expand PLIs to labour-intensive sectors, such as apparel, toys, footwear for boosting employment generation, and to sectors with large imports but domestic capability, like capital goods, chemicals, to reduce import dependence. To encourage a larger segment of MSMEs to benefit from the PLIs, the scheme should be modified in terms of lower capital investment thresholds and production targets to include MSMEs,” CII added in its proposal.
Source: Business Standard
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