The Hindu Business Line : CII asks for more reforms to achieve higher growth

On labour reforms, the chamber urged the need for a total dismantling of the inspector raj; it asks for allowing contract labour in non-core sectors.

New Delhi , Dec. 27

THE Confederation of Indian Industry (CII) has said that a 12 per cent-plus growth in the manufacturing sector is a must if the economy has to grow at the rate of eight to nine per cent or higher on a sustainable basis.

In its pre-Budget memorandum to the Ministry of Finance, the chamber pointed out that a high growth in manufacturing is also necessary to generate greater employment opportunities.

To achieve 12 per cent growth in manufacturing, the constraints in five areas, namely, infrastructure, labour laws, cost and access to credit, technology and skills development need to be urgently addressed through necessary reforms, said the chamber.

The chamber further said that in view of the already high-levels of public debt servicing and fiscal deficit, privatisation of public sector enterprises is the best option for finding the necessary resources for infrastructure investment. An annual target for gross capital formation in infrastructure should be announced publicly to help monitor progress and achieve real results. For boosting private investment in the sector, the chamber has reiterated the importance of establishing robust and autonomous regulatory mechanisms and creating an Infrastructure Development Board with branches in all the States.

On labour reforms, the chamber urged the need for a total dismantling of the inspector raj. The memorandum asks for allowing contract labour in non-core sectors.

The chamber has also suggested establishing technology upgradation funds schemes (TUFS) for all manufacturing sectors and allowing a weighted deduction of 150 per cent for all in-house R&D expenditure and to R&D commissioned by private firms in academic institutions and public sector laboratories.

With regard to direct taxation, the chamber has called for a single corporate taxation rate rather than many cesses and surcharges. It has also recommended the general depreciation rate be raised from 15 per cent to 25 per cent arguing that depreciation charged under the Companies Act is the same or higher.

The food processing sector can now emerge as a strong growth driver and employment generator in the economy. Therefore, the chamber has suggested the food processing industry be exempt from central excise duties for the industry to benefit by new demand and achieve economies of scale.