The Hindu Business Line : Pre-budget talks: Chidambaram to meet industry captains today

TAKING the consultative dialogue of the pre-Budget exercise forward, the Union Finance Minister, Mr P. Chidambaram, is all set to meet the captains of trade and industry, on Tuesday.

This pre-Budget consultation with industry comes at a time when the country is set to move into a value-added tax (VAT) regime that would replace sales tax. The Finance Minister has already promised that significant steps would be undertaken on improving tax administration.

India Inc, which has been pitching for a growth and investment oriented Budget, will be submitting its views on various aspects of economic issues including suggestions on direct and indirect tax structures.

Some of the issues, which are likely to be taken up by the industry besides bringing down the current corporate tax ceiling, include specific provision for investment allowance and the concept of `free depreciation'.

In its pre-Budget memorandum, the Federation of Indian Chambers of Commerce and Industry (FICCI) has advocated for a concept of `free depreciation', where an enterprise may choose the quantum of depreciation and the years of claim so that it is in a position to plan its cash flows in a better manner to optimise productivity.

However, to avoid any misuse, the chamber has suggested it should be provided that the provision could be used for the purpose of replacement of plant and machinery.

On the issue of investment allowance, FICCI has repeated its demand for re-introduction of investment allowance. The Associated Chambers of Commerce and Industry of India has advocated a five-pronged strategy including bringing transparency in direct and indirect taxation, making the system more accountable and phasing out CST for a common market framework in the country.

The chamber in its pre-Budget memorandum has asked the Government to halve the import duty on all industrial inputs (raw materials and intermediaries) from the current 20 per cent and reduce the duty on final products for consumption from 20 per cent to 15 per cent.

The Confederation of Indian Industry (CII) has sought further rationalisation of the indirect tax structure and greater reliance placed on growth rather than rates to improve tax revenues. Introduction of VAT and reduction of customs and exercise duties are urgently needed to keep manufacturing globally competitive, the chamber has pointed out in its pre-Budget memorandum.

The PHD Chamber of Commerce and Industry, in its pre-Budget memorandum has raised the issue of agriculture reforms.

It has urged the Government to augment capital investment in agriculture by allocating resources for infrastructure and modernisation of the farm sector.

Mr Sunil Kant Munjal, Mr M.K. Sanghi, and Mr Onkar S. Kanwar are some of the captains of India Inc who are going to attend the meet.

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