FM kicks off pre-Budget consultations

Meets stakeholders from financial sector

Ahead on the Union Budget 2020-21 to be presented on February 1, Finance Minister Nirmala Sitharaman kicked off pre-Budget consultations on Monday. In two separate meetings, Ms. Sitharaman met stakeholders from the financial sector and capital markets, and those from fintech and digital economy sectors.

According to an official release, the main areas of discussion during the meeting included increasing credit off take from banks, governance changes in PSBs with special focus on P.J. Nayak Committee recommendations, creation of well-functioning bond markets, benefits of partial credit guarantee scheme, alternative investment funds in real estate sector and measures for alleviating stress among NBFCs.

Meanwhile, key demands from the IT service industry, included a 15% corporate tax for new firms in Special Economic Zones (SEZs), setting up of a fund for deep-tech start-ups and incentivisation of R&D in the country. The industry, represented by Nasscom, also sought speedy action on redefining ‘intermediary service providers’ under GST to exclude IT-BPM firms, as well as labour laws reforms.

“Extending 15% corporate tax to newly-incorporated service companies in the SEZs will achieve the outcome of all new manufacturing and services companies in SEZ availing same tax rate. This measure will have a very limited fiscal impact but provide impetus to companies to invest,” Nasscom senior director and public policy head Ashish Aggarwal told The Hindu.

During the meeting with digital economy stakeholders, which lasted for over two-hours, stakeholders also called for more steps to ensure of doing business. George Paul, chief executive officer at Manufacturers’ Association of Information Technology (MAIT), pointed out that ease of doing business continues to remain a challenge with “key ground level changes still missing. The area of classification in the electronics industry still needs to be worked on. Circulars and notifications by the government for the industry need to be forward looking and not retrospective for better alignment between the industry and the government to work towards a common vision. Good coordination between Ministries on policy measures is required to ensure quicker resolution of industry issues."

Mr. Paul added that incentives under the Merchandise Exports of India Scheme (MEIS) need to be reinstated. “Exports in electronics industry will be highly dampened and have a negative impact on investments in this sector. Electronics exports will be hit hardest without MEIS,” he said.

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Printable version | Feb 25, 2020 1:01:21 PM |

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