India Inc. will raise sector-specific issues during its pre-Budget meeting with finance minister Yashwant Sinha on Tuesday. Prominent among the identified sectors which will figure during the meeting include automobiles, drugs and pharmaceuticals, textiles, telecom equipment, steel, hardware, capital goods and cement.

Reforms in the agriculture sector will also figure prominently because industry believes that reworking of agriculture policies to ensure reduction of volatility in food production and a shift of production to ensure higher value added crops will boost the overall prospects of the economy in the medium term. Industry also proposes to reiterate its demand for expansion of service tax but at the same time study the growth potential of the particular sector and the impact of the tax before it is levied.

The industry is expected to seek reduction in special excise duty (SED) on passenger cars and multi-utility vehicles (MUVs) from 16 per cent to eight per cent, industry sources said.

Before meeting the finance minister, the auto sector has revised its demand for complete abolition of SED and taken a pragmatic approach by asking for a reduction in SED, sources added.

The steel sector is focusing on two core issues. It is likely to ask the government to review its policy allowing zero duty imports from Nepal and restrict it to only those products for which input is sourced from Nepal or India. The sector has also decided to push for according deemed export status to Indian steel supplied to those projects enjoying concessional duty under project import condition.

The emphasis of the textile sector in this Budget will be to push for a level playing field. The sector is likely to request the finance minister to levy a uniform excise duty of 8 per cent on spinning as well as on processing fabric with the aid of power without any exemptions, sources said. The textile industry also wants removal of additional burden of 15 per cent of basic excise duty as it is already reeling under recession and is unable to face competition.

Telecom equipment and information technology (IT) hardware sectors are likely to suggest the government to stick to the original schedule of customs duty reduction on telecom hardware items as per the IT Agreement. The industry is apprehending a change in schedule from 2005 to 2003.

The drug & pharmaceutical industry is expecting the government to boost research & development activities by allowing duty free imports of good required for R&D and also allow duty fee imports of immunisation vaccines.

The cement sector is expecting abatement of MRP (maximum retail price) for white cement, which may be increased from 40 per cent to 60 per cent and a reduction of customs duty on non-coking coal from 25 per cent to 15 per cent.

Sources said the taxation issues expected to be raised by businessmen during the meeting include a reduction in corporate tax on companies to about 30 per cent from the present level of 35 per cent and then to 25 per cent in the next two to three years besides abolition of surcharge and abolition of minimum alternative tax (MAT) as it has proved to be counter- productive and a disincentive for promotion and growth of industrial activity.

The list of prominent businessmen who have been invited for a pre-budget meeting with the finance minister include Ratan Tata, M S Banga (Hindustan Lever), N Srinivasan (India Cements), Jagdish Khattar (Maruti), A M Naik (L&T), Yusuf Hamid (Cipla), Nusli Wadia (Bombay Dyeing), Anji Reddy (Dr Reddys), Rahul Bajaj (Bajaj Auto), Narayana Murthy (Infosys), Aswin Dani (Asian Paints), Azim Premji (Wipro), Kumar Mangalam Birla (Aditya Birla group), Arvind Pande (Steel Authority) and Mukesh Ambani (Reliance).

Among the invitees are Confederation of Indian Industry president Sanjeev Goenka, Federation of Indian Chambers of Commerce and Industry (Ficci) president R S Lodha and Associated Chambers of Commerce & Industry of India (Assocham) president K K Nohria.