Lowering of goods and services tax (GST) on meeting, incentives, conference and exhibition (MICE) business and extension of reduced corporate tax to all entities to attract foreign direct investment (FDI) are some of the suggestions put forward by the Federation of Indian Export Organisations (FIEO) to Indian finance minister NirmalaSitharaman during pre-budget discussions. Other suggestion include tax reduction on product development and exploring the possibility of value chain production—wherein some of the units make parts and components, some make the final product and some make accessories for the same product—instead of merging a few small units into a large one, according to an FIEO press release.
Another alternative could be to make or upgrade clusters so as to provide common facilities like tool rooms, testing and certification facilities all under one roof for units producing same or similar goods so that the operational costs are minimised. As the MICE business is gradually shifting from India to Sri Lanka, Singapore and Thailand due to high GST rate of 28 per cent, the rate may be lowered to 18 per cent if not to 12 per cent, FIEO suggested. The tax deduction on research and development (R&D) expenditure that has come down from 200 per cent to 100 per cent now may be restored to its original as R&D investment in India is extremely low (1 per cent of GDP) and most of the R&D is being done at the behest of the government or in sectors like pharmaceuticals where it is Hobson’s choice, added FIEO.
