India Inc Seeks Higher Capex and Lower Tax Rates in FY26 Budget
By: Admin | Date: December 31, 2024 | Category: Budget 2025-26 | Read Time: 4 Minutes
Key Industry Demands for Union Budget FY26
In a pre-budget meeting chaired by Finance Minister Nirmala Sitharaman on December 30, 2024, leading industry representatives laid out their proposals for the 2025-26 Union Budget. These suggestions emphasized increasing capital expenditure, rationalizing tax structures, and fostering growth across key sectors.
Capital Expenditure (Capex)
Confederation of Indian Industry (CII): Proposed a 25% increase in capex allocation over the ₹11.11 lakh crore for FY25.
Federation of Indian Chambers of Commerce & Industry (FICCI): Suggested a 15% hike in capex outlay.
Taxation and Fiscal Deficit
CII:
Reduce marginal tax rates for personal income up to ₹20 lakh.
Cut excise duty on fuel to boost consumption.
Target a fiscal deficit of 4.5% for FY26.
FICCI:
Simplify TDS/TCS rates to a 2-3 tier structure.
Eliminate TDS/TCS on GST transactions to prevent working capital issues.
Sector-Specific Recommendations
Employment and PLI Expansion
CII:
Introduce PLI 2.0 for ready-made garments.
Expand trade pacts with the EU and UK.
Implement labour reforms.
PHDCCI:
Extend the PLI scheme to sectors like medicinal plants, handicrafts, leather, gems, and space.
MSME Growth and Credit Flow
Assocham:
Increase credit flow through programs similar to CGTMSE.
Mandate banks to disclose collateral-free loans granted to MSMEs.
Additional Proposals:
Introduce MSME universities for skill development and entrepreneurship training.
Expand presumptive taxation to new-age businesses like data centers and cloud computing.
Other Key Recommendations
- Customs and Duty Structure (CII):
A three-tier tariff structure:
Inputs: 0-2.5%
Intermediates: 2.5-5.0%
Final Goods: 7.5%
- Public Asset Monetization (CII):
Divestments in select PSEs to raise ₹10 lakh crore.
Launch NMP 2.0 (2026-2030) with a ₹10 lakh crore target.
- Health and Education (FICCI):
Increase public health expenditure to 2.5% of GDP.
Provide e-Rupi vouchers for school children to promote education quality.
Double the deduction for health insurance premiums to ₹50,000 under Section 80D.
- Tax Rate Adjustments (PHDCCI):
Lower tax rates for individuals and LLPs to 25%.
Address inverted duty structures in industries like cement, aluminium, and paper.
Impact of Proposals
These measures, if implemented, could:
Enhance consumption and employment.
Improve MSME competitiveness and growth.
Strengthen infrastructure development through higher capex.
Simplify taxation and reduce compliance burdens.
