Union Finance Minister, P Chidambaram met representatives of industry, industry associations and chambers of commerce as part of his pre-budget consultations with various interest groups and experts. The Finance Minister opened the discussion by requesting the participants to give their views on specific actionable points- tax and non-tax - to impart a new impetus to growth and investment by removing the existing obstacles. Some of the important suggestions made by the participants during the meeting are as follows:

General:

• Provide incentives for Research and Development (R&D) activities for all sectors;
• Set up a Skill Development Bank and facilitate intermediation of knowledge;
• Encourage investment in the infrastructure sector by providing/enhancing tax exemptions for such investment;
• Move towards an effective GST rate of 15 per cent in the next few years;
• Promote India as a Corporate Headquarter by giving tax incentives;
• Give infrastructure status to gas pipelines and associated storage facilities and mega steel projects;
• Give exemptions for investment in agriculture related sectors like cold-chains etc;
• Increase depreciation rate to 25 per cent per year for tax purposes;
• Remove Fringe Benefit Tax (FBT) on expenditure incurred on sales promotion;
• Remove anomalies in the Cutsoms and Excise duty structures;
• Provide incentives for Indian companies to become global.

• Increase limit for excise exemption to Rs 3 crore and rationalize excise duty rates to provide a phasing in of the increase in the rates;
• Remove anomalies in the excise duty structure;
• Remove FBT on small and medium enterprises;
• Ease depreciation norms;
• Increase tax audit exemption limit;

• Enhance abatement norms from the existing level to 45 per cent of MRP;
• Remove withholding taxes on R&D and include expenses on clinical trials in R&D;
• Include overseas expenditure on R&D for exemption purposes;
• Set up training institutes for biotechnology.

• Extend the Textile Upgradation Fund (TUF) by another five years ;
• Provide capital subsidy for processing hubs;
• Provide support system for relocation of old existing units.

• Decrease the total tax burden on this sector by rationalizing multiple duties and charges;
• Do away with the requirement of financial and performance guarantees;
• Simplify and rationalize customs duty on software for telecom industry;

• Facilitate setting up of seed funds/angel funds to address lack of innovation;
• Provide incentives for setting up rural electronic infrastructure facilities;
• Remove complications in IT related tax structure and bring down litigations.

• Provide “infrastructure” status to tourism industry;
• Earmark funds collected for maintenance of heritage structures;
• Increase budgetary allocation for promotion of India as a tourist destination.

The Union Finance Minister Shri P. Chidambaram met the major trade union leaders as a part of pre-budget consultations with various interest groups. The major suggestions made by the trade union leaders are as follows:

• Inflation should be checked.
• Policy on SEZs should be revisited since it leads to loss of revenue, using up of agricultural land and dilution of labour laws.
• Exemption limit for personal income tax to be enhanced to Rs 2 lakh.
• Pending Pay Commission award, Interim relief should be allowed to the tune of 15 percent of DA plus basic pay. Pensioners should also be allowed interim relief.
• There should be no ceiling for payment of bonus out of profits and Payment of Bonus Act should be suitably amended. Bonus should be paid to all employees of profit making companies.
• Interest rates should not be reduced on EPF and GPF.
• Employment guarantee should be provided.
• Interest rates on the deposits of senior citizens in banks should be enhanced to 9 per cent .
• Export of iron ore should be banned.
• Comprehensive legislation is required for Social Security of labour in the informal sector.
• Impact study should be done on effect on employment of lifting quantitative restrictions, dereservation of items in SSI and Press Note 18.
• Workers should be given shares in industries.
• Mandatory contribution of workers to social security funds should not be diverted to stock markets or placed in private hands.
• Revival package for the sick PSUs which are potentially viable should continue.
• More investment should be made in the social sectors like health, education for better human development.
• Centrally funded schemes are required for enforcement of labour legislations.
• Pension Funds should be invested in infrastructure.
• There should be a member representing labour in Planning Commission.
• Macroeconomic balance, including low inflation should be maintained through fiscal prudence to benefit the workers.
• Ban on child labour should go hand in hand with poverty alleviation of the parents of child labour.