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India needs to transition towards a more modest, three-tier rate structure in goods and services tax over time, according to Confederation of Indian Industry president Sanjiv Puri.
He pitched for creating a GST Council-like structure for pushing reforms, some of which are in states’ domain. Puri is also chairman and managing director of ITC.
In an interview to ET, Puri said India is doing well in a stressed global environment because of the policy instruments deployed by the government over the past years, “…the cumulative impact of which is that the economy is on a much stronger foundation.”
India grew 8.2% in fiscal 2024, remaining the fastest-growing major economy. CII is projecting 8% growth for FY25 on back of a pickup in agriculture and services sectors and increase in public spending. “We have the forecast for rainfall to be better, so crops should be better,” he said.
‘Rural Demand likely to Sustain’
“We should start seeing, with the passage of time, the cumulative impact of all investments that are happening in the economy – public capex… private capex is also starting to kick in,” said Puri, adding that its impact would be felt on the services side.
Rural demand, the CII president said, should sustain because of the monsoon impact. “But the more important question to address is: How do we create a more resilient virtuous economy in the rural areas?” he said, adding that the industry body is pushing for public capex to be increased by 25%.
“We would also suggest higher allocation to rural areas, whether housing, agriculture or other physical infrastructure. These will also help the economy,” he said. It is about creating a virtuous cycle – investment-led growth, employment, consumption and reinvestment – to lift growth, he said.
Taxation
Asked if there is a case for imposition of wealth tax in India, Puri said, “What we require is to broaden and deepen the number of people in the tax bracket. We need to increase the pot – that’s where the effort should be directed towards.”
The industry body has suggested simplification of the tax deducted at source (TDS) and capital gains tax regimes by bringing about consistency in rates and the holding period for different types of instruments.
Investment
On the China+1 strategy of businesses, Puri said, “We are already seeing this on ground in some areas. Electronics is one example.”
He noted that India had also taken a very proactive stance to attract such investments. “The window is certainly much higher in the next two to four years. So, we should all be focused on leveraging this opportunity,” said the ITC CMD, adding that it is also for the industry to identify opportunities.
“We need to do as many free trade agreements (FTAs) as possible because as we integrate with global value chains, in the absence of FTAs, it should not become an additional cost,” he added.
Puri said there are risks associated with artificial intelligence, but it is equally an opportunity too, “if we have the right regulatory framework for responsible and ethical usage, data privacy and other things, and create a thriving ecosystem.”
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