BUDGET 2024: As the Interim Budget very ner, the Federation of Indian Chambers of Commerce & Industry (FICCI), has highlighted the resilience of India's recent economic growth. However, given the prevailing global challenges, FICCI emphasizes the government's necessity to persist in prioritizing public capital expenditure, according to a note released on January 24.
In a bid to streamline the financial sector, FICCI proposes the establishment of an "Indian Taxonomy" that aligns with global standards. This move aims to facilitate banks and financial institutions in assessing exposure to sustainable versus non-sustainable activities, a task currently hindered by the absence of a comprehensive taxonomy.
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In the context of evolving global business dynamics, FICCI encourages India to seize the manufacturing opportunity presented by the "China plus one" strategy. The organization urges the government to attract substantial investments from global manufacturing companies, fostering India's ambition to become a key global manufacturing hub.
Focusing on successful initiatives, Ficci acknowledges the effectiveness of the Production Linked Incentive (PLI) schemes. To further enhance investor confidence and capitalize on global interest in India, FICCI recommends extending the concessional tax regime for manufacturing operations for a minimum of five years.
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Recognizing innovation as a key driver for economic growth, FICCI underscores the need for India to align its patent regime with global best practices. The organization suggests various amendments, including extending the concessional tax rate of 10 percent on income from patented products manufactured in India. This aligns with the government's "Make in India" initiative.
FICCI also advocates removing the requirement for the joint patentee to be the 'true and first inventor,' aiming to facilitate companies funding research and development (R&D). Furthermore, clarifications are sought regarding the taxation of overseas royalty for patents registered in both India and foreign countries.
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In a bid to boost research and development, FICCI proposes extending the concessional tax rate to new R&D companies over the next five years. This move aims to encourage industrial groups to establish separate entities for R&D activities, ensuring transparency and compliance.
Turning attention to the Micro, Small, and Medium Enterprises (MSMEs), FICCI suggests revising the qualifying criteria for mandatory registration on the TReDS platform. The proposal is to make registration mandatory for companies with a turnover exceeding Rs. 250 crore, broadening the platform's reach.
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FICCI recommends leveraging the Account Aggregator framework for MSME lending, addressing legal and compliance issues that currently exclude joint and corporate accounts.
For MSMEs facing financial challenges, FICCI proposes extending the limit for classifying overdue payments from 90 days to 180 days. This adjustment aims to provide relief, allowing MSMEs to prioritize their working capital towards business operations.
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FICCI also highlights concerns regarding the complexity of tax deduction at source (TDS) provisions, calling for a streamlined TDS rate structure. The proposal suggests three rate structures for TDS, along with a "negative list" exempting certain payments from TDS.
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As Budget 2024 approaches, FICCI's comprehensive recommendations aim to shape policies that foster economic growth, innovation, and sustainability in India.
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