Make in India: PM promises stable tax regime, says more reforms to come
Mumbai: Calling Make in India as the biggest brand ever created in the country, Prime Minister Narendra Modi today promised investors a predictable and transparent taxation regime and simplified licensing and clearance processes.
"We will not resort to retrospective taxation; we are making our tax regime transparent, stable and predictable," he said. "We are also simplifying processes like licences, security and environmental clearances," said Modi, while addressing heads of state, a battery of business leaders and foreign delegates at the launch of 'Make In India Week' here.
"This (Make In India) brand has captured imagination of institutions, industry, individuals and media....It reflects our collective desire and is forcing us to make corrections and increase efficiency.
"India is one of the most open countries for FDI," Modi said, adding that FDI inflows have gone up by 48 per cent since this government came to power in May 2014.
"We want to make India a global manufacturing hub," he said, adding there is an all-round emphasis on 'ease of doing business' now.
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"India is blessed with 3 'Ds', Democracy, Demography and Demand, to this we have added another D, Deregulation," the PM said.
Changes are taking place at state level too and there is healthy competition among states in ease of doing business and boosting infrastructural linkages, he said.
"In 2014-15, India contributed 12.5 per cent to global growth. Its contribution to global growth is 68 per cent higher than its share of world economy," he said.
"India has consistently been ranked as the most attractive investment destination by several global agencies and institutions. Our young entrepreneurs are showing us newer and faster ways for enterprise and delivery and my government is committed to support them.
"My friendly advice to industrialists : Don't wait. Don't relax. There are immense opportunities in India," he said.
The Make in India Week is aimed at attracting investments into the manufacturing sector and showcasing success stories at a specially-created venue at the BKC business district in Central Mumbai.
Noting that "youthful energy" with 65 per cent of the population being under 35 is "our greatest strength," Modi said India launched the Make in India campaign a year ago to create employment, self-employment opportunities for youth.
In a year, he said, Make in India has become the biggest brand India has ever created.
"Today, India is perhaps the most open country for FDI.
Most of the FDI sectors have been put on automatic approval route. Our FDI inflows have gone up by 48 per cent since the day my government came to office.
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"In fact, FDI inflow in December 2015 was the highest ever in this country. This is at a time when global FDI has fallen substantially," the Prime Minister said.
On the issue of safety of properties and rights, Modi said: "We have already enacted a law for fast-tracking of arbitration proceedings. We are establishing dedicated commercial courts and commercial divisions in high courts. The formation of the Company Law Tribunal is at the final stage."
The government will soon be putting in place an effective IPR policy and patent regime and expects to pass the bankruptcy law, which has been tabled in Parliament, he said.
Talking about the taxation, Modi said that a "number of corrections" had been carried out. "We have said we will not resort to retrospective taxation. And I repeat this commitment once again."
Modi said that the government wants the share of manufacturing in the GDP to go "up to 25 per cent in the near future".
"In the manufacturing sector, we have taken decisive steps to simplify processes and rationalise provisions. This includes licensing, cross-border trade, security and environmental clearances.
"We have announced attractive schemes in several sectors including electronics and textiles. We have made substantial policy corrections in the defence sector. From licensing to offset regime and export regime, we have given what the defence industry was looking for," he said.
"Hence, on the front of policy and procedure, we have made our systems cleaner, simpler, pro-active and business-friendly," he added.
According to Modi, the all-round emphasis is on ease of doing business.
Saying that his government was also ensuring smooth and transparent allocation of natural resources, he said this has led to increased production and a level playing field.
"This year, we will record the highest ever coal production. Also, 2015 was the year when India's highest ever generation of electricity was recorded," he pointed out.
"I believe in minimum government and maximum governance.
Therefore, almost on a daily basis, we are trying to remove the bottlenecks that were affecting investments and growth," the Prime Minister said.
"When we started the Make in India campaign, manufacturing growth in the country was 1.7 per cent. This year, it has improved substantially. In the current quarter, manufacturing growth is expected to be around 12.6 per cent," Modi said.
The Prime Minister said that India has become the fastest growing large economy in the world. "We will end this fiscal year with well over 7 per cent growth in GDP. IMF, World Bank, OECD, ADB and other institutions have projected even better growth in the coming days."
"We have jumped twelve ranks in the latest global ranking by the World Bank on ease of doing business. India has improved its UNCTAD ranking of investment attractiveness, from fifteenth to ninth," the PM noted, adding that the country has jumped sixteen places on the World Economic Forum's global competitive index, while the rating agency Moody's has upgraded the rating of India as positive.
"With this background, I invite and encourage you to make India your work place and also your home," Modi said, adding India was particularly keen to increase investments in "next generation infrastructure" including roads, ports,
railways, airports, telecom, digital networks and clean energy."
"We are also investing in our social, industrial and agricultural infrastructure to give better income and quality of life to our people," he asserted.
"So far, it was our implementation capacity that was the biggest bottleneck. We have speeded up processes. The result is faster turn-around of projects. India's highest ever kilometres of new highway contracts awarded was in 2015.... increase in railway capital expenditure was the highest this year," Modi said.
To enhance financing, "another bottleneck", government was opening up greenfield and brownfield projects for Public Private Partnership and trying to increase resources for infrastructure with "strong fiscal discipline and by "plugging leakages", said the Prime Minister.
The Prime Minister mentioned National Investment and Infrastructure Fund and Tax Free Infrastructure Bonds, and said the country was working with other countries, financial markets and funds on these financial instruments.
"Fifty of our cities are ready for setting up Metro Rail Systems. We have to build fifty million houses. The requirement of road, rail and waterways is enormous. There is no time for incremental changes. We want a quantum jump," he said, terming India as "land of immense opportunities".
Modi also noted that while pursuing growth, India had "made a commitment to the world community at the recent COP-21 meeting in Paris" to curtail carbon footprint, and was targeting renewable energy in a big way at 175 Gigawatts.
"I lay great stress on zero defect and zero effect manufacturing. We place high emphasis on energy efficiency, water re-cycling, waste to energy, clean India and river cleaning," he said, adding this provides more opportunities for investments.
"India offers you a solid platform to test and launch your making and designing capabilities," he said.
The Prime Minister mentioned the Digital India and Skill India campaigns and financing schemes "dedicated to promote entrepreneurship" such as MUDRA Bank loans, adding he had "impressed on banks" to finance young entrepreneurs from Scheduled Castes and Tribes as well as women entrepreneurs.
"Only this will realise the dreams of Mahatma Gandhi who wanted industries to be run in villages....Only this willrealise the dreams of Dr Bhimrao Ambedkar who advocated the need to move surplus labour from agriculture to other occupations," said Modi.
Domestic industry and investors are "feeling much more confident and optimistic in spite of an uncertain global situation," the PM claimed.
