FICCI calls for tax incentives for start-ups

Federation of Indian Chambers of Commerce and Industry’s (FICCI) national executive committee (NEC) which met here today urged the government to offer tax benefits linked to direct employment for start-up businesses.

Jyotsna Suri, President, FICCI, told reporters after the NEC meet that the tax benefits could be “for a defined rebate proportion of up to 50 per cent and for a limited period of about five years.”

FICCI has also urged the government to take significant measures to boost MSMEs and entrepreneurship, especially with the creation of Mudra Bank and self-employment and talent utilisation (SETU) mechanism.

“Given the considerable stress the government has laid on boosting entrepreneurship, FICCI suggests introduction of a rebated income tax for small start-up businesses, in essence individually owned,” Suri said.

On the basis of experience in China and Singapore, the Indian scheme can be called START (Start Up Rebated Tax) wherein tax benefits are linked to direct employment by the start-up businesses.

One of the key issues for small businesses is the sanctity of contracts and steps must be taken to ensure that commercial contract can be enforced quickly.

FICCI has called for a level playing field in ‘Make in India’ initiative. Suri said Make in India is a great initiative and “to make it truly successful we need to create an efficient and competitive eco-system for the industrial sector.”

“We urge the government to look into the specific bottlenecks that have affected expansion of our manufacturing sector. We would also request for additional push to export-oriented sectors that have been reeling under stress due to slowing global demand,” she added.

The trade body also urged the government that the existing FTAs must be reviewed and new FTAs must result in greater effective market access for Indian industry.

Apart from holding consultations and meeting at Central Government level, FICCI has been actively working with State to promote investments.

Suri said, “While massive impetus has been given to public investment, government may also consider initiating privatization of public sector ports; identify one port for privatisation in the current year.”

For implementing power reforms, government has set an ambitious target of 24x7 power for all. “Given the huge NPAs accruing from the State distribution companies, there is an urgent need to build consensus with states on reforms in power distribution and draw up a common minimum programme to be implemented in a time bound manner,” she said.

The government may consider setting up an Energy Empowerment Committee at the State Power Ministers’ level on the lines of GST Empowered Committee.

“This also requires massive improvement in the governance structure of the power sector at the state level. Further, given the huge impetus on solar power, rapid investments are required for project development. There is a need to create visibility on annual capacity allocations for solar projects in the next five years as well as for creating demand visibility for solar manufacturing in the country,” she said.