Amid debate over withdrawal of stimulus measures, CII has asked the Finance Ministry to provide fiscal incentives to boost investment and employment.
Industry body CII said that fiscal incentives are required since bank credit to the industry is growing at half the pace than the pre-global financial crisis level.
"One of the immediate need is to boost investment and employment through fiscal incentives at a time when non-food
credit is growing at a rather conservative pace of 15 per cent, compared to around 30 per cent before the onslaught of
the slowdown," it said.
The upward pressure on interest rates with growing tightening of the monetary policy further justifies the need
for investment linked fiscal incentives for manufacturing.
As the analysts expect phased withdrawal of stimulus in the Budget after a 16-year record level of industrial growth
at 16.8 per cent in December, CII said the fact that growth was due to low base of last year should be taken into account.
"While the current IIP growth figures are encouraging, account needs to be taken of the fact that the impressive
figures are owing to a very low base effect," CII said.
On direct taxes, CII called for a cut in minimum alternate tax (MAT) from the current level of 15 per cent. MAT
is imposed on profitable industries, which escape tax because of various exemptions.
"...such a high rate of MAT dilutes the intended incentives available to industry," it added.