Budget 2023: Service And Trade Sectors Seek PLI For MSMEs, Taxation Parity For Securities
Recommendations to shore up participation of retail investors via tax parity in treatment of securities was proposed.
The Ministry of Finance held its fifth pre-Budget meeting on Thursday with representatives and stakeholder groups from the service and trade sectors.
Some of the requests made included lending assistance for micro, small and medium enterprises, the removal of goods and services tax from tourism facilities and infrastructure, parity in the tax treatment of securities, and separate tax treatment for the alternative investment funds business model.
Among the attendees was Gopal Srinivasan, the chairman of TVS Capital Fund, who also represented the Indian Private Equity and Venture Capital Association.
Srinivasan highlighted the need to shore up the participation of retail investors at a time when FPI participation is susceptible to market volatility.
"India boasts of capital commitments of Rs 6.94 lakh crore since 2012, when AIF (PE/VC) guidelines were introduced, recording an impressive CAGR of 122% during this 10-year period. However, 85% of this continues to flow from overseas shores," said Srinivasan.
He suggested parity in the basic taxation framework for listed and unlisted shares and securities for resident investors.
"Having parity in the treatment of securities will increase the capital allocated to investments in new asset creation that generate jobs and boost the economy," he said.
He recommended that the holding period for listed and unlisted shares and securities may also be aligned uniformly.
According to him, there should be separate legal forms for AIFs and recognition of AIF operations in Indian law.
In the last Union Budget, to promote funding for sunrise opportunities and agriculture and rural enterprises through NABARD, a blended finance model through multiple funds of funds was announced.
Srinivasan called for addressing the operationalisation challenges in the blended finance model with multiple fund of funds and the limitations in pooling funds like the Pension Fund Regulatory and Development Authority, Employees' Provident Fund Organisation, etc.
Industry Body Suggestions
Saket Dalmia, president of PHDCCI, pitched for a reduction in the cost of doing business at the MSME level.
"This would include a reduction in the cost of capital, power, logistics, land, and labour. Furthermore, costs of doing business should not be more than those in the top three manufacturing countries, namely China, the United States, and Japan," he said.
Dalmia suggested priority lending for MSMEs, a separate PLI allocation for the sector, and called for a reduction of Chinese imports of finished products.
Dalmia highlighted that most international tourist destinations do not attract GST and VAT. Accordingly, he suggested removal of 18% GST from tourism facilities and infrastructure.
Dalmia also pitched for special concessions on green energy developments, such as nil taxes on biofuels and nil import duties on electrolysers to ramp up investment in green hydrogen.
Other attendees included Jatin Dalal, global CFO of Wipro Ltd.; Dr. Sangita Reddy, joint managing director of Apollo Hospitals Group; industry bodies like the Federation of Indian Export Organisation; the National Restaurant Association of India, among others.