‘Time for an industrial policy that covers new-age sectors too’

KR Srivats Aesha Datta New Delhi | Updated on January 11, 2018 Published on May 07, 2017

Shobana Kamineni, CII President, and Executive Vice-Chairperson, Apollo Hospitals Kamal Narang   -  Kamal Narang

CII’s first female President calls for implementing Kelkar panel report on PPPs

India should frame a new industrial policy that also covers new-age industries, Shobana Kamineni, President, Confederation of Indian Industry (CII), has said.

“This is the time to bring in a new industrial policy. The existing policy does not reflect new industries such as e-commerce,” Kamineni told BusinessLine in an interview soon after taking charge as CII’s first female President.

Kamineni also felt that interest rates should continuously come down, and there was an urgent need to kick-start credit growth in public sector banks.

The latest government initiative — the promulgation of an ordinance — to resolve banks’ non-performing assets is expected to clean up balance sheets and set the stage for a pick-up in credit offtake in the coming days, she noted.

“Private investments will happen. It is a ‘chicken and egg’ situation. Because there is idle capacity in some sectors, no new investments are planned. Also, sluggish demand is holding back new investments,” she added.

To accelerate growth, another move that is crucial is the implementation of the Vijay Kelkar committee report on public-private partnerships (PPPs), Kamineni said. “The government is spending a tremendous amount on infrastructure and there are many projects that need to move forward,” she noted.

The new CII chief, however, did not agree with the view in some quarters that top corporate houses are sitting on piles of idle cash and not deploying them usefully to expand business.

“No businessman will sit with idle cash. They will find a way to deploy those funds,” said Kamineni, who is Executive Vice-Chairperson of Apollo Hospitals.

On GST and other taxes

CII, which sees India achieving double-digit economic growth in the next three years, perceives the rollout of Goods and Services Tax (GST) from July 1 as a “game changer”.

“Industry is prepared for GST, which, in its full form, will contribute an additional 1 percentage point to GDP growth,” Kamineni said, adding that she was confident that industry would cope with compliance challenges, given that it had navigated IND-AS (accounting standards aligned to the IFRS).

“IND-AS is way tougher than GST. No one made a noise about it. So, industry by and large should be able to face the GST compliance challenges,” she said.

The new CII President also pitched for a more equitable taxation system (of direct taxes). “Corporate tax rate should be 25 per cent across the board. Why can’t we be bold and bring it down to 18 per cent while removing all exemptions?” she said.

“We have to stay competitive. Our taxation system should be equitable. People want to stay within the ₹50-crore revenue mark so as to gain from a lower tax rate. You are discouraging growth by having a higher tax rate on revenues above ₹50 crore,” Kamineni said.

Corporate governance

Kamineni felt that governance practices in corporate India had matured, although recent episodes in two iconic corporate houses (the Tatas and Infosys) had brought to the fore some challenges. “The good thing is that governance is so strong in the two corporates that issues have been resolved,” she said.

“It’s not that we have weak laws. Our Clause 49 is more stringent than Sarbanes-Oxley. CII has always championed good governance,” she added.

Published on May 07, 2017
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