The industry body further said that investment allowance should be introduced as deduction from profit to the extent of new investment in plant and machinery.

The Assocham also emphasized the need for a boost in physical and social infrastructure with large doses of investments and tax relief, and ensuring energy security with tax holidays for oil and gas exploration activities.

At the pre-Budget discussion with finance minister Pranab Mukherjee, Assocham president-elect Rajkumar Dhoot called for greater interaction and coordination between the industry and the government to keep up the economic growth momentum.

Dhoot added that institutions like India Infrastructure Finance Company Limited (IIFCL) and Life Insurance Corporation should disburse more funds for developing infrastructure while the government coordinates effectively for timely clearances, approvals and implementation of projects.

According to Dhoot, the rate of depreciation on plant and machinery should be restored to 25 per cent from 15 per cent currently. “The increase in rate of depreciation in long run is revenue-neutral as the total amount cannot exceed the cost of assets.”