The Hindu Business Line : Road builders seek incentives for State highway projects

What they want
Players called for removal of dividend distribution tax on the special purpose vehicles that are formed to implement specific road projects.
Several investors sought creation of dedicated State Road Funds by imposition of a small cess on fuel sale at State levels to fund the road building initiative.

New Delhi May 27 Even as the Planning Commission suggested that the States plan out a State Highways Development Programme on the lines of National Highways Development Programme (NHDP), road construction firms sought duty concessions and dedicated funding mechanism to make these projects attractive.

"Duty concessions extended for national highways construction should be extended to State highways as well," Mr Rohit Modi, Chief Executive (Roads and Bridges), Developmental Projects, Engineering Construction and Contracts Division, Larsen & Toubro, said here, while speaking at a seminar on public private partnership in State highways.

On a broader level, for all road projects, he called for relaxing the rule that makes the purchased equipment by special purpose vehicles "non-transferable" for five years. Since road construction projects get over in two to three years, the equipment would be idle for the remaining years.

Players also called for removal of dividend distribution tax (DDT) on the special purpose vehicles that are formed to implement specific road projects.

"DDT results in double taxation — the tax is levied when the SPV pays dividend to its parent companies and also when the parent firms pay dividend to the shareholders," he said.

Calling for a stable taxation regime, Ideal Road Builders' Chairman and Managing Director (CMD), Mr D.P. Mhaiskar, pointed out that certain income tax benefits extended to the concessionaires (road builders and operators) when they started working on the projects were withdrawn in subsequent Budgets.

Replying to these queries, Mr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission said, "I agree some of these are valid points. We shall take it up with the Finance Ministry."

Several investors sought creation of dedicated State Road Funds by imposition of a small cess on fuel sale at State levels to fund the road building initiative — on the lines of the Central Road Fund (CRF).

"I have written to all State Chief Ministers suggesting them to roll out State Highways Development Programme," Mr Ahluwalia said here.

Mr Arun Bharat Ram, former President, Confederation of Indian Industry (CII), said that the CII had proposed setting up a national centre for excellence in public private partnership with support from the Ministry of Finance, private sector and other funding agencies.

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Road builders seek incentives for State highway projects