India Inc has wish list ready for next government
New Delhi, March 22 (IANS) Hit by a demand slowdown and meltdown
in the global economy, India Inc has its wish list ready for
the next government, with sector-specific policy reforms and
tax sops on top of the
agenda to tide over the crisis.
The ailing export sector, which in October witnessed a decline
for the first time in a decade due to the
contraction in global trade, has sought an exemption from
paying income tax for some five years to deal
with the turmoil.
"Since the export sector is an employment-oriented industry,
we should be exempted from paying income tax for five years,"
said A. Sakthivel, president of the Federation of Indian Export
"We want a separate policy for the export sector that
can be drafted after the government analyses what
the global market situation is. The policy should take into
consideration what other competing countries
are doing," Sakthivel told IANS.
According to the federation, promoted by the commerce ministry,
the export sector lost about 500,000 jobs during the third
quarter of this fiscal and it was imperative to formulate
a separate policy to help
arrest this ominous trend.
Another sector that has been a significant contributor both
for fresh jobs and exports in the past, the
information technology industry, wants the service tax schemes
to be simplified and an extension of sops
available on exports to spur growth.
Section 10A of the Income Tax Act exempts payment of tax on
incomes from any newly established firm in a free trade zone,
while section 10B extends a similar sop on income from any
newly established 100 percent
An extension in the validity of sections 10A and 10B till
2010 and rationalising excise, service tax and
surcharge on direct taxes will help industry cope with falling
profits, said the National Association of
Software and Service Companies (Nasscom).
"Since ours is a skill-based industry, we need constant
upgradation of the education system so that we
have enhanced capacity and capability to service the world,"
Nasscom president Som Mittal told IANS.
He also hoped for a people-oriented regular budget from the
next government - one that will focus on a
unified taxation system, with minimum tax burden on the common
man, apart from increased allocation for
infrastructure and social sectors like education and health.
"We would appreciate a uniform tax regime with a common
goods and services tax," Mittal said.
For the automobile sector, which has had a good run in the
past decade, continuity in policy is the main
plank. Beyond that, the representative organisation - the
Society for Indian Automobile Manufacturers
(SIAM) - does not have a long wish list.
"We want the next government to continue with the auto
policy spelt out in 2002," said SIAM director
general Dilip Chenoy, explaining that it calls for automatic
approval of foreign investment up to 100
percent with no minimum investment criteria.
Similarly, the gems and jewellery sector, which has seen some
large-scale job cuts in recent months, also
has its own set of demands. It accounts for exports worth
$21 billion and employs some 1.3 million people,
of which some 800,000 people are in the diamond cutting and
"This sector gives good business every year. The next
government should put more stress on this industry,
especially to help the workers who had to be laid off,"
said Vasant Mehta, chairman of the Gems and
Jewellery Export Promotion Council.
Speaking for the industry at large, the Associated Chambers
of Commerce and Industry of India(Assocham)
said the next regular budget should introduce the general
sales tax system and remove the irritants in the
present value-added tax regime.
"Service tax has become a massive money-spinner for the
government. It would be even more so as the
economy moves to seeing higher percentage of its gross domestic
product (GDP) come from services," added
"It must be recognized that any further increase in the
rate of taxation would dissuade compliance and
compel tax avoidance innovations by trade, especially at the
grassroots level, due to the complexity of
collection and bureaucratic harassment in remitting it."
(Pupul Dutta can be contacted at email@example.com)
"Some Guidelines to Inner Life">>>