NEW DELHI: The government has identified close to a dozen sectors, ranging from capital goods, defence, pharma and electronics to labour-intensive ones such as textiles and food where it is considering proposals for tax concessions. It is also pushing for land and procedural reforms to attract investment as part of a goal to be self-sufficient.
Although the department for promotion of industry and internal trade (DPIIT) has proposed a tax holiday for sectors such as telecom, chemicals and capital goods, the finance ministry is not in a mood to waive taxes after it slashed corporation tax to 15% for new manufacturing entities as it is keen to avoid the “SEZ experiment”. This saw industries shift to the tax-free enclaves without generating fresh investment or jobs. The department has also proposed tax benefits for labour intensive sectors such as food processing and leather.
Its other suggestions regarding creation of manufacturing clusters and new models for land leasing and “plug-and-play” facilities to enable businesses to simply invest and begin operations quickly have found favour with Prime Minister Narendra Modi. The efforts are part of the Make in India 2.0 initiative being piloted by the government after the first phase did not result in a significant jump in investments.
With land cited as one of the key roadblocks by investors, the government is toying with multiple options, including channelising large tracts available with state agencies such as railways and ports. Besides land amortisation, which allows a fixed annual payback once operations commence, easy payment and leasing options are being discussed.
The other thrust is on creating manufacturing clusters in states and reforming SEZs. The Centre is hoping that a series of steps to reform the clearance process such as simplified procedures and a single-window mechanism — a buzzword with all governments — will help speed up investment decisions and reduce uncertainty, something that investors have always complained about.
The government is keen to tap parts of the global supply chain that may want to relocate from China, following the ongoing coronavirus pandemic and also due to rising wage costs.
A part of the push also flows from the realisation to reduce dependence on China, as Covid-19 production disruptions across the border hit the supply chain for medicines and mobiles phones in India. The broad contours of the plan have been thrashed out with Modi himself holding consultations with key ministerial colleagues last month.
Source:- timesofindia.indiatimes.com