After the successful launch of the ‘Make in India’
programme, India is likely to introduce a globally compatible tax regime to
revive the manufacturing sector.
Finance Minister Arun Jaitley on Monday indicated
that easing of entry norms for manufacturing as an idea being mulled. He said
there had to be a shared vision between the Centre and states, political
parties, regulators and allied institutions to put India back on a growth
track.
He also nudged the Reserve Bank of India (RBI) to
cut the policy rate. The high cost of capital, he said, was the most important
factor in the slowing of manufacturing growth in the recent past.
“Our regime
has to be competitive. People purchase goods; they don’t like to purchase taxes
along. Unless our taxation regime is internationally compatible, the cost of
our products is going to be more. Competition is going to be international.
He identified cost of capital as a single factor
which had slowed manufacturing. Though he did not directly name RBI, it is a
fact that the central bank has consistently refused the finance ministry’s
expressed desire to a lower policy rate.
Modi government expects growth in gross domestic
product to be 5.5 per cent in 2014-15, up from 4.7 per cent the year before.
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