The Department for Promotion of Industry and Internal Trade — an arm of the ministry of commerce and industry — prepared an action plan for the new government.
New Delhi: The commerce and industry ministry has proposed a customised incentive package to attract foreign investments in sectors such as electronics, chemicals and food processing, an official said.
The proposal is part of a 100-day action plan prepared by the Department for Promotion of Industry and Internal Trade (DPIIT) — an arm of the ministry — for the new government.
According to the plan, India can attract $100 billion of foreign direct investment annually, provided it matches up to the financial incentives of competing countries like Vietnam.
The Southeast Asian nation provides a host of incentives to foreign investors such a low rate of corporate income tax and tax exemptions up to four years.
"Major investments in the field of electronics, manufacturing, chemicals, food processing and others can come through such incentives. Customised incentive packages will be provided to large investors in priority sectors/areas," the official said.
These labour intensive sectors hold huge investment potential and job creation.
The ten-point action plan has also proposed a favourable tax regime, formulation of employment generation strategy through legal changes, proper allocation of natural resources, support for small businesses, steps to promote budding entrepreneurs, release of new industrial policy.
Commerce and Industry Minister Suresh Prabhu had carried out a series of consultations across the country for formulation of a detailed industrial policy.
For a favourable tax regime, the department has suggested inclusion of petroleum products, natural gas and electricity within the ambit of the Goods and Services Tax (GST) to help improve competitiveness of businesses by removing the cascading effect of taxes and enabling input tax credit.
"There is no justification of having a separate tax regime for non-corporate business entities," the official said.
It has noted that there is a need to remove legal impediments in labour intensive industry as restrictive labour laws do not allow businesses to scale up and discourages formal hiring of labour.
It has proposed to recognise part time/shared/free-lance employment as new categories of jobs with a view providing flexibility to businesses.
Allocation of natural resources should be done by balancing the need to raise government earnings and allow for development of the sector, according to the plan.
The department suggested that revenue sharing models will be pursued — where the upfront payments from businesses are reasonable and do not affect viability of the business.
"Vast resources of coal, bauxite remain unutilised due to inadequate capacity of public sector in exploration and mining. Participation of state corporations and private sector would be allowed to strengthen commercial mining," the official said.
Further the action plan has recommended formulation of a national retail policy to help 65 million small traders.
Besides, there is a proposal to provide support to small businesses in terms of marketing their product and make them more competitive.
"These actionable strategies and interventions will address challenges and layout the priorities for industrial development in future," the official added.
Prime Minister Narendra Modi will be administered oath of office for his second term along with his new council of ministers on May 30.