In order to make India a hot destination for investors, the government has undertaken a slew of reforms. The huge thrust laid on public investments is expected to crowd in private investments in the next six to twelve months
To further accelerate the pace of investments and energies growth FICCI suggests immediate action on some critical areas, as listed below:
1. Lower lending rates
FICCI’s industry surveys show that capacity utilization levels are still below optimal levels. Consumer demand has also not taken off in a manner that could boost investments. Interest rates have a key bearing on consumption and investment demand. FICCI is demanding policy rate cuts by the central bank and equivalent transmission of the same in the form of lower lending rates by the banks for both consumers and investors.
2. Focus on domestic industry
Make in India is a great initiative and to make it truly successful there is a need to create an efficient and competitive eco-system for the industrial sector. FICCI has urge the Government to look into the specific bottlenecks that have affected expansion of our manufacturing sector and additional push to export-oriented sectors that have been reeling under stress due to slowing global demand. Additionally, existing FTAs must be reviewed and new FTAs must result in greater effective market access for Indian industry.
3. Labour Reforms
While expecting implementation of amendment bills in the parliament at the earliest, FICCI has made these suggestions: (a) consider grand-fathering existing laws for existing work force; (b) have amended contemporary laws for new entrants to the work force; (c) operationalize exit policy under national manufacturing policy; similar exit mechanism required for companies outside NIMZs; (d) workers’ housing to be an integral part of all the industrial corridors, parks, investment zones and smart cities; bring suitable schemes for the same and allocate land.
4. Further Boost to Entrepreneurship:
Given the considerable stress the government has laid on boosting entrepreneurship, FICCI suggests introduction of a rebated income tax for small startup businesses, in essence individually owned. Basis experience in China and Singapore, the Indian scheme can be called START (Start Up Rebated Tax) wherein tax benefits should be linked to direct employment by the startup businesses and tax benefit can be for a defined rebate proportion of say up to 50 per cent and for a limited period of say 5 years. One of the key issues for small business is sanctity of contracts and steps must be taken to ensure that commercial contract can be enforced quickly.