Indian industry must wean away from relying on subsidies and high import tariffs to stay competitive and the government must further rationalise compliances and reduce the costs of doing business, Confederation of Indian Industry (CII) director general Chandrajit Banerjee said on Monday, while making a strong pitch for slashing income tax rates for lower income earners.
Speaking at a discussion on the upcoming Budget for 2023-24 hosted by the Ananta Centre, Mr. Banerjee also called employment ‘the elephant in the room’, stressing on the need to focus on job creation along with growth and suggested including employment as an additional factor in official incentive schemes aimed at spurring manufacturing.
“I would like to really see in the Budget, a very strong call on the lower brackets of the income, absolutely on the lower slabs that could be changed… that would boost consumption demand as well as help fight the inflation piece and that that’s an important signal,” he said.
While such tax cuts could be construed as a political message in what could be the last full Budget before the 2024 Lok Sabha elections, the CII director general emphasised there are no ‘wrong economics’ involved in the idea, ‘so it need not be seen as a political overdo’.
Citing the emerging geopolitical and economic conditions, Mr. Banerjee said India has an opportunity in the manufacturing sector to create good quality jobs with policy steps to ease compliances, reduce the cost of doing business and engender trust between government and industry.
Indian industry, he said, must work out how to ‘have a mindset and move away from the subsidies-driven sort of approach and move towards a more competitiveness-based ecosystem to grow’, noting that ideas like the Production Linked Incentive (PLI) scheme to push investments are good at this point in time but can only work for a finite period.
“…Over certain budgets, we have seen certain products where our tariff has been increased, but I think increasing tariffs cannot be the solution for us to become competitive. I think we need to be very careful on that,” he said.
