The Hindu Business Line : CII chief urges sops for capacity expansion

THE newly elected President of the Confederation of Indian Industry (CII), Mr Sunil Kant Munjal, would prefer to focus energies on `implementation' rather than `ideation' during his one-year tenure as the head of the apex industry organisation.

"Focus on implementation does not mean that we will stop looking at new stuff. We already have a number of ideas which need to be implemented," Mr Munjal told Business Line soon after taking over as CII President.

In this context, Mr Munjal suggested that the Government could support industry in capacity creation through specific fiscal incentives such as investment allowance and accelerated depreciation. He held that the time was ripe for the industry to look at more capacity creation, given that it has emerged leaner from the downturn of the late nineties.

"The downturn of the late nineties had forced Indian industry to look within and to improve its competitiveness. Industry has now emerged leaner from this downturn. This is the positive aspect. However, the negative aspect is that they have not been looking at further capacity creation. It is time that more capacities are created and Government must encourage this,"

Mr Munjal said.

The CII President suggested that the Government must provide 15 per cent accelerated depreciation on additional capacity creation of at least 10 per cent. He also said that the Government should bring back investment allowance under the income-tax law. Mr Munjal held that fiscal incentives like accelerated depreciation and investment allowance would be useful to bring investments into the economy at a time when the country requires more investment in diverse areas, including infrastructure and manufacturing.

Mr Munjal underscored the need for a debate on how the current growth levels in gross domestic product (GDP) could be accelerated to, say, a level of 12 per cent. "We have already demonstrated that 8 GDP growth is achievable. We will have to put our minds together to look at what needs to be done for achieving higher growth," he said.

Mr Munjal held that higher investment especially foreign direct investment (FDI) would come about if the Government were to follow a `single window concept' and simple procedures that are easy to understand. He also underscored the need for stability in Government policies.

"Investors make their investments under a particular set of circumstances which they expect to continue. If these policies were to change frequently, no investor would relish it especially if the change is adverse to their interest," Mr Munjal pointed out.

As part of its efforts to bring dramatic improvements in the rural economy, CII plans to soon embark on a training and skill upgradation programme that will assess skills at the local level and initiate measures to upgrade them.

When asked whether the forthcoming Assembly elections would impact the pace of the Centre's decision making, Mr Munjal hoped that the elections would not adversely impact the decisions.

"There has to be consensus on crucial issues that can impact growth. Five-or-six such issues should be identified well in advance and agreement should be reached to handle them in a fashion that growth is not hampered," Mr Munjal said.

On Value Added Tax (VAT), Mr Munjal felt that this was crucial for industry and hoped that the newly agreed date for implementation will be adhered to. "The date for implementation should not slip again. Any move to implement VAT will only be good for the industry," the CII President said.

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