The Centre will soon set up a ‘regulatory review committee’ to address policy-related roadblocks and other factors inhibiting the country’s industrial growth as well as impacting the ‘ease of doing business’ and private investments.
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The government is also mulling a new mechanism to monitor domestic and foreign investment proposals. The idea is to fast-track decisions on such proposals, in coordination with State governments and the Centre’s investment facilitation and promotion arm, ‘Invest India’.
Unutilised capacity
In addition, the Centre is looking at ways to ensure use of the industry’s unutilised capacity. Currently, the country-wide average unutilised capacity is about 26% (In other words, average utilisation of industrial capacity is only 74%). Measures will soon be taken soon to increase domestic demand as well as boost exports to ensure the entire capacity is utilised.
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The proposal to constitute the committee, which will be chaired by the Secretary, Department of Industrial Policy and Promotion, and include India Inc. representatives, comes in the backdrop of a slowdown in industrial growth and sluggish private investment.
These decisions followed a meeting that Commerce and Industry Minister Suresh Prabhu held on Tuesday with industry bodies including the CII, FICCI and Assocham, as well as senior government officials including Chief Economic Adviser Arvind Subramanian.
Meeting with exporters
Official sources said the Minister would soon hold another meeting with the representatives of Micro, Small and Medium Enterprises (MSME) and exporters to address their problems, including those related to the Goods and Services Tax (GST) regime.
Mr. Prabhu told reporters that “the discussions were useful, productive and forward-looking. We will form a ‘regulatory review committee’ to look at issues inhibiting the industrial growth. We discussed measures to increase the utilisation of the existing capacity. The aim is to push the economic growth into a higher trajectory.”
R.V. Kanoria, past president, FICCI, said, “the biggest takeaway [from the meeting] was that it was a confidence building measure. We discussed ways to increase employment and growth. The government must keep this dialogue [with the industry] going.” The CII demanded a reduction in interest rates by 100 basis points over the next year to spur consumption. It also wanted corporate tax to be brought down to 18%, while removing all exemptions. Besides, the CII called for relaxation of fiscal consolidation targets for a year or two due to exceptional circumstances. It suggested that an increased public spending to boost construction of highways, low-cost rural housing, rural and urban infrastructure and power (transmission and distribution). Besides, it said more time should be given for MSMEs for complying with the GST regime. It wanted electricity, oil and gas, alcohol and real estate to be brought under the ambit of the GST regime.
The industry body also wanted the government to simplify the framework for claiming input tax credit. It wanted the government to increase the interest rate subvention for exporters from 3% to 4%.
On employment-related issues, the CII called for reinstatement of fixed-term employment for all manufacturing sectors. The CII also asked the government to provide stable and coordinated policy regime transitions with adequate lead times and certainty – for instance in environmental-related regulations in auto, cement, chemicals and construction equipment.