The government should consider a production linked incentive scheme for containers as a key priority, said Pradeep Multani, president of PHD Chamber of Commerce and Industry.

In an interaction with ET, he flagged the issues of semiconductor and container shortages which have been impacting industry sector-wide, especially the SME and MSME segments.

“PLI scheme for the container and for semiconductor manufacturing will provide the required incentive for the industry,” said Multani, who took over as president of the industry body this month.

The government should also provide clarity on the validity of the low tax rate regime which was introduced in September 2019, besides working on a stable direct and indirect tax regime, he said.

While this will give a roadmap to industry and investors wanting to come to India,

improving the ease of doing business, reducing cost of logistics and timely resolution of disputes would go a long way in aiding industry, he said.

“Let there be stable direct taxation and indirect taxation so that people can strategize and come up with the projects and be confident that investment will not be wasted,” said Multani.

The government announced a flat 15% corporate tax rate for companies setting up manufacturing plants in India by 2023, provided they give up all exemptions and deductions. Multani said that while the rate was very attractive, companies willing to make investments under the scheme are not clear of the sunset window, if any, on the duration of the tax rate.

“They must make a clear cut this this policy will be maintained, this rate of taxation will be there for industry per year, for the next 10 years,” he told ET.

Incentives for local industry akin to those in China, including government backed infrastructure and plug and play facilities, should also be considered, he added.

“We don’t want any protectionism, we want a level playing field,” he said.

He also flagged levy of cesses by state governments on top of goods and services tax (GST). In one instance, he mentioned that state department in Uttarakhand had issued some 1,200 notices to industry seeking cess of 0.1%-0.5% of a company’s turnover for using natural resources under the Biodiversity Act, even though the resources are tax exempted under the commonly traded commodities.

Measures to drive demand

Multani also suggested bringing crude and petroleum products such as petrol, diesel and other fuels under the GST ambit, as it would bring down the total tax burden on consumers and increase household incomes.

It would also help in cooling of commodity prices and easing up of escalating transportation costs, which were among key concerns for Indian industry.

Rationalisation of GST rates including lowering GST on products that have higher rates, would create avenues to raise disposable incomes for the average taxpayer.

On personal income tax, the industry body has proposed that the highest tax rate should be 25% instead of present 30%, such that more money can be left in hands of the taxpayer, which can in turn be used to spur consumption and generate demand.