Domestic private investment is likely to take centre stage when finance minister Arun Jaitley presents the Union Budget in Parliament on February 29.
“The incentives could be in the nature of tax concessions and clarity, along with further simplifications of regulatory clearances,” senior government officials said .
The Department of Economic Affairs (DEA) and the Department of Industrial Policy and Promotion (DIPP) are working to chalk out a strategy, they added.
The Narendra Modi government has already announced a string of steps to boost foreign inflows by raising the FDI limit in different sectors, including insurance and defence.
At the recent World Economic Forum summit in Davos, Switzerland, Jaitley had said India needs some additional growth engines, indicating that the focus would shift to reviving private investments.
Both the DEA and the DIPP are in active consultations with the private sector. “Some of the key challenges which have been cited by corporate houses include high borrowing costs, regulatory issues such as land acquisition, ease of doing business, stability and clarity in taxation laws, reduction in tax rates, tackling over-leveraged balance sheets and un-utilised capacity expansion. The government will try and address these,” sources said.
When contacted, DIPP secretary Amitabh Kant told HT that foreign investments are crucial for economic growth, but refused to divulge specific details.
“For the Indian economy to continue to grow, it has to be on the back of domestic private sector investments. Foreign direct investments are also crucial but for a continuous robust growth, investments from the private sector have to be ramped up,” Kant said.
“I have myself done road shows in five states and interacted with the industry. As part of this exercise we are now coordinating with stakeholders and resolving issues.”