It has also demanded a policy framework for encouraging SMEs which would speed up deregulation, decontrol, transparency as well as streamline reforms in this sector.
Majority of Indian states have drafted and modified the VAT Act for their respective states, But the country is not yet close to the implementation of VAT. That is actually a major setback for fiscal reforms and competitiveness. The Budget 2004-05 must clearly state the target date by which VAT will come into being, and the date should not be beyond 1st April, 2005, CII said in a statement.
Recommending rationalisation of the duty structures in indirect taxes, CII has suggested to have a three-tier tax structure from 2005-06. Apart from the exceptions such as on certain agricultural products or automobiles, today there are four tariff lines of 5 per cent, 10 per cent, 15 per cent and 20 per cent. This may be rationalised to a three-tier structure in 2005-06 at 5 per cent, 10 per cent and 15 per cent, it said.
The creation of the Rs 10,000 crore Small Industry Development Fund is the need of the hour. This is important as the bank credit to the SSI sector has increased from Rs 168,000 crore in March 1991 to Rs 530,000 crore in March 2003. This reflects a growth in demand and the need for funds by this sector, CII said.