Industry bodies await an 'ideal' Budget

BANGALORE, INDIA: When it comes to Union Budgets, there is no one more enthusiastic and curious than the industry bodies. It's no different this year, too.

As the Budget for 2012-13 is going to be announced on Friday, some of the premier bodies in the country express their views and expectations.

"Corporate India wants stimulus package to continue in the form of excise duties and service tax at the current level of 10.3 per cent in the Union Budget for the financial year 2012-13," Associated Chambers of Commerce and Industry of India (Assocham) has said.

It has also urged the government not to increase excise duty and service tax from the current 10.3 per cent. In a pre-budget expectations survey conducted by Assocham, nearly 500 CEOs participated and demanded for reduction in central sales tax from 2 per cent to 1 per cent to accelerate implementation of the Goods and Services Tax.

As for Som Mittal, president of National Association of Software and Services Companies (NASSCOM), "We have formed a great scheme called SEZ. Last year, we introduced minimum alternate tax (MAT) on it, it gave a very wrong signal and I hope this year the finance minister will remove the MAT."

"It doesn't have an impact on the extra creditor and its cash flows, because anyway it's adjusted over a period of 15 years."

Given that the scope of fiscal and monetary manoeuvrability is limited owing to widening fiscal deficit and inflation, Chandrajit Banerjee, director general of Confederation of Indian Industry, feels that the revival in investment growth has to essentially come from private sector and that the Union Budget can do a lot in this direction.

"In the wake of deteriorating fiscal health, the Budget must announce initiatives that can accelerate the pace of private investments. Among various measures, depreciation rates for plant and machinery should be raised from 15 per cent to 30 per cent, at least for a period of two years to encourage more capital investment."

Meanwhile, MAIT, the body representing India's IT hardware, training and design & manufacturing, in a memorandum to the Ministry of Finance, has stressed upon the need for a stable policy regime and growth-oriented measures to boost IT hardware industry in the country. 

"With lower-than-expected consumption of IT products in the Financial Year 2011-12, owing to the Thailand flood and Rupee devaluation, we are now hoping for a long-term growth-oriented and investment-friendly policies to provide much needed drivers," says MAIT president Alok Bharadwaj.

While pointing out the need for rapid expansion of IT hardware industry, he adds, "In India's economic transformation, IT is a big enabler. A long-term, holistic fiscal policy framework is the need of the hour to encourage manufacturing and a much-needed investment fillip to the IT industry in India."

According to the Bangalore Chamber of Industry and Commerce vice-president H.V. Harish, the technology sector has been struggling with the issues of dual taxability of software (under service tax and VAT laws) and unreasonable transfer pricing adjustments. "Some clarity on the taxability and withholding on software payments, safe harbor and advances pricing arrangement rules are keenly awaited."