Change seeker

New Delhi, Dec. 27: The Confederation of Indian Industry (CII) has sought better infrastructure, labour law reforms and cheaper credit from the government in its pre-budget memorandum for 2006-07.

Industry has urged the government to invest more in infrastructure, suggesting the privatisation of public-sector enterprises as the best option for generating necessary resources.

The chamber also wants an annual target for gross capital formation in infrastructure to be announced publicly to help monitor progress and achieve real results.

An autonomous regulatory mechanism and an infrastructure development board with branches in the states need to be set up to boost private investment in the sector, said CII.

On labour reforms, the chamber has urged for a total dismantling of the inspector raj, allowing contract labour in non-core sectors and making the Industrial Disputes Act applicable to units with more than 1000 workers.

India Inc has also asked the government to focus on a 12 per cent growth in the manufacturing sector so that the economy could grow 8-9 per cent on a sustainable basis.

“A 12 per cent plus growth in manufacturing is necessary if the GDP has to grow at the rate of 8-9 per cent or higher on a sustainable basis,” the memorandum said.

“High growth in manufacturing is also necessary to generate greater employment opportunities. Constraints in five areas such as infrastructure, labour laws, cost and access to credit, technology and skill development need to be addressed,” it said.

Besides, the memorandum has sought to introduce technology upgradation fund schemes (TUFS) for all manufacturing sectors and allow a weighted deduction of 150 per cent for all in-house research and development expenditure.

The industry body wants a restoration of 100 per cent rate of depreciation for energy-saving devices, pollution control equipment, alternative energy producing devices, computers and devices for water conservation.

On indirect taxation, the CII said as recommended by the Kelkar committee, further reduction in import duties should be accompanied by real progress in internal reforms to reduce the competitive cost disadvantage for industry.

Emphasising the need to eliminate the central sales tax over the next two years, it suggested imposing a universal VAT and countervailing duty on imports to offset the impact of VAT and implementation of the Electricity Act 2003, without amendment.

It said maximum care should be taken to design future free trade areas as firms were out to take advantage of better infrastructure and labour market conditions in partner countries and import goods at zero duties.

It advocated sequential elimination of central sales tax by initially reducing it to 2 per cent from March 1, 2006 and then bringing it to zero from March 1, 2007.