Representatives from the Indian industry sought higher capital expenditure and lower tax rates in a meeting chaired by Finance Minister Nirmala Sitharaman on December 30 ahead of the Union Budget for 2025-26.
While Confederation of Indian Industry (CII) recommended raising the allocation for capex by 25 percent in the Budget for 2025-26 over the Rs 11.11-lakh-crore earmarked for the current financial year, Federation of Indian Chambers of Commerce & Industry (Ficci) suggested a hike of 15 percent in the outlay.
CII also suggested steps to boost consumption by reducing the marginal tax rates for personal income up to Rs 20 lakh per annum, a cut in excise duty on fuel, and by increasing in the minimum wage rate under the Mahatma Gandhi National Rural Employment Guarantee Scheme.
The industry body further said the Centre should avoid sharper contractions and target a fiscal deficit of 4.5 percent in FY26 keeping in view demand conditions.
On the tax front, Ficci, too batted for simpler rates. "Rationalise the multiple TDS/TCS rates by converging them into a simple two or three-tier rate structure which will avoid classification disputes and prevent blockage of working capital in the industry. Also, stop the practice of imposing TDS/TCS on transactions that are subject to GST since the relevant information is available through GST filings," it suggested.
To spur employment, CII recommended introducing production-linked incentive (PLI) scheme 2.0 for ready-made garments, expedited trade pacts with the European Union and the United Kingdom and implementation of labour reforms, while PHD Chamber of Commerce & Industry suggested expanding the PLI scheme beyond the 14 sectors to medicinal plants, handicrafts, leather and footwear, gems and jewellery, and the space sector.
To boost women’s participation in the workforce, Ficci said that the government could consider a special tax exemption up to a defined limit for working females on expenses incurred on childcare for children up to the age of five years.
Multiple industry lobbies batted for more credit and lower tax burden for Micro Small & Medium Enterprises (MSMEs).
Assocham recommended an additional allocation or net to enhance the credit flow to MSMEs, much like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) launched during Covid. It also asked the Centre to mandate banks to periodically disclose the number and amount of collateral-free loans granted to MSMEs.
Some of the other suggestions offered by the industry bodies:
• Three-tier customs tariff structure for inputs at 0 - 2.5 percent, intermediates at 2.5 - 5.0 percent, and for final goods at 7.5 percent over a period of time, with certain exceptions (CII)
• Divestment in select PSEs to retain 51 percent to unlock about Rs 10 lakh crore, which could be utilised for enhancing public capex, retiring government debt, and setting up a sovereign wealth fund (CII)
• National Monetisation Pipeline (NMP) 2.0 for the period 2026 to 2030 with a target of Rs 10 lakh crore (CII)
• Vouchers to parents of schoolgoing children in form of e-Rupi to be redeemed at schools chosen by parents to send children to. Focus on outcome of schools, incentivise virtuous competition among schools both government and private (Ficci)
• Higher allocation for public health expenditure to 2.5 percent of the GDP by 2025, as promised in the National Health Policy 2017 (Ficci)
• Double deduction for health insurance premiums under Section 80D to Rs 50,000 and expansion of eligible dependents under this provision to encourage broader coverage
• Reduced tax rates for individuals and limited liability partnership (LLP) firms to 25 percent (PHDCCI)
• Removal of inverted duty structure in industries such as cement, aluminium, steel, packaging material, paper and paperboard industry (PHDCCI)
• Extended scope of presumptive taxation to MSMEs and new-age businesses like data centers, data hosting, cloud computing (Assocham)
• MSME universities to promote skill development and entrepreneurship training as well as to foster growth within the sector (Assocham)
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