New Delhi - Welcoming Commerce Minister Suresh Prabhu's move to convene a meeting with industry associations to discuss issues affecting industrial growth, India Inc said the key lies in boosting investors confidence.
"We submitted to the Minister that the key to arresting the long-term decline in investment rate from over 35% to below 30% lies in boosting investors' confidence in the country's medium-term growth prospects and overall environment for doing business," the Federation of Indian Chambers of Commerce and Industry (Ficci) said in a statement.
"The immediate solutions include a reduction in the interest rate, passing this reduction to consumers and investors, and a sharp depreciation of rupee," it said.
The industry body expressed concern that the recent increase in consumption demand is being increasingly met through imports rather than higher capacity utilisation.
"Ficci welcomes the Minister's announcement that a Regulatory Review Committee will be set up to examine how regulatory institutions may be coming in the way of increased investment. We also welcome the Commerce Ministry's decision to set up an India-China Working Group to address the problem of the huge bilateral trade deficit," it said.
The industry body also welcomed the Ministry's decision to create an Investment War Room to monitor investment in the country.
It urged the government to build a stronger partnership with the private sector so that the latter once again becomes a driver of growth and a generator of employment in the country.
Another industry body, Confederation of Indian Industry (CII), said that at this juncture, an extra nudge is desirable to boost both growth and growth sentiments.
"The four main areas that need attention are investments; exports; Micro, Small and Medium Enterprises (MSMEs); and employment," CII said.
Its suggestions included reduction of interest rates by 100 basis points over the next year to spur consumption, relaxation of fiscal consolidation targets for a year or two, discouraging state governments from curtailing capital investments, lowering corporate tax to 18%, simple framework for claiming input tax credit and expansion of coverage of Goods and Services Tax (GST) to include electricity, oil and gas, alcohol, and real estate.
For exports, it suggested allowing commercial banks to lend more to Small and Medium Enterprises (SMEs) exporters and expand interest rate subvention from 3% to 4%.
"There is a need to reduce pressure on working capital of MSME for various reasons such as GST and contract terms. Increase the time, especially for SMEs, for payment of taxes and duties under the GST. Create capital insurance scheme to protect MSME against delayed payments. Encourage alternate sources of lending, especially to MSMEs, like securitisation of exporters' receivables," the CII said.
It also suggested to reinstate fixed-term employment for all manufacturing sectors, the statement said.