SME Times News Bureau | 19 Aug, 2019
In
a meeting of top industry leaders, called by Finance Minister Nirmala
Sitharaman to revive economic growth, ASSOCHAM President B K Goenka todaysought
a “quick-fix” stimulus package to initiate investment cycle and an immediate
game plan to make the best out of the ongoing US-China trade war.
In
his presentation before the Hon’ble Finance Minister, the ASSOCHAM President
said, “With current slowdown in global and domestic market, we need to have
quick-fix solutions and observe the economy for few years for the effectiveness
of the Stimulus package.”
Goenka
said, given the fiscal constraints, the government can raise resources by
monetising idle government land. In turn, such land can be used for affordable
housing and new projects.
He
said while India’s exports are declining, exports in June itself showing a drop
of over 9 per cent year -on - year, the unabated US-China trade war throws many
opportunities for India, which needs to be tapped.
Currently
the diverted US investments and trade is being tapped by Vietnam and
Bangladesh.
ASSOCHAM
President strongly advocated setting up a Development Bank which will support
start up risk capital.
He
also sought Finance Minister’s consideration on Accelerated Depreciation on
investments as another measure to encourage investment
Emphasising
the immediate need for revival of exports, Mr Goenka said there are sectors
like textile and garments, are suffering due to constant review and frequent
changes being brought in tax refunds/incentives schemes.
He
said an investment of Rs 1 crore in the garments/made up sector can create 72
new jobs. The investment-employment ratio in the textile sector is among the
highest.
“Our
export potential in the textile industry is further encouraged by rising costs
in China and the advantage is being taken by Vietnam, Bangladesh and Mexico. We
must emerge as a strong competitor,” the ASSOCHAM President said.
He
said to boost exports and ensure stability, tax policies and schemes on refunds
and incentives should be made steady and continuous, without intermittent
changes.
Higher
rate of corporate taxes in India also make Indian businesses uncompetitive. Mr
Goenka said reviving private sector capex is also key to the economic growth.
One of the growth drivers would be investment allowance and accelerated
depreciation in green field project.
There
should be incorporation of accelerated depreciation system in first year or
over 3 years. Tax rebates can be given for profits ploughed back as investment
in new projects.
Though
there has been rationalization in the category of goods falling under 28 per
cent GST, there are still 33 items which remain in the highest slab.
“It
is recommended that the rate of other goods falling under such category such as
cement, consumer durables, automobiles including parts thereof etc should be
reduced to 18 per cent, he said”