An India-centric US business advocacy group has suggested the Finance Minister Nirmala Sitharaman to lower tariff in the Union Budget if the country wants to compete with China-backed mega free trade agreement Regional Comprehensive Economic Partnership (RCEP).
Mukesh Aghi, president of US India Strategic and Partnership Forum (USISPF), told PTI that if India can focus on a much more predictable environment from a policy framework, it will give more confidence to the investors. “Bringing a sense of transparency in policy making also sends a very positive signal. And if India is going to be competing, especially with the RCEP, then it has to look at lowering its tariff.”
Aghi highlighted that tariffs in India in the last 12 months have been rocketing. “What it does is yes, it protects a local industry, but it doesn’t make them competitive. So its important to protect the local industry, but at the same time, it is important to make them more competitive intervals. Lowering of tariff is important,” he said.
The USISPF, in a recent submission to the Union Finance Minister, recommended specific measures to improve direct and indirect tax collection, which will promote private investment and ensure fiscal and monetary stability. “On the direct taxation side, we recommend specific amendments to facilitate activity in the digital economy, reduce tax and depreciation rates to boost investment, clarify carry-forward and loss-offset rules, and streamline regulations related to withholding tax, indirect transfer, and dispute resolution,” it said. “For indirect taxes, we recommend amendments to address challenges with deferred duty payments, simplify various processes and procedures, and align customs regulations more closely with actual industry practices. Together, these changes will free up much-needed investment capital, make it easier for companies to manage their tax liabilities, and provide a needed boost to the economic activity during the next fiscal year.”
In regards to MSME, the USISPF has recommended specific steps to promote supply-chain financing, subsidise the insurance of MSME loans, improve the assessment of MSME credit risk and loan disbursement, and facilitate faster settlement of claims between healthcare providers and insurers. “We have recommended that the midsize public banks should be privatised. If you want large institutional investment to come in, then the clause you have management control and board control lies with the Indian partner has to be removed,” Aghi said. “Because American corporate boards will not approve, an investment, if it goes in India and they don’t have a management or board control over those investment.”
Acknowledging digitalization of the economy, the USISPF recommended the government to ensure that Digital India can transact securely by expanding the use of digital signatures in negotiable instruments, powers of attorney, deeds, contracts and other legal documents.