Ficci to have dialogue with states on GST

Heeding to Finance Minister Pranab Mukherjee's suggestion, industry chamber Ficci today said it will reach out to the states disagreeing with proposed Goods and Services Tax (GST) provisions to resolve their apprehensions.

The Centre and the states are engaged in talks over the proposed GST for about four years. Since 2007, the government has been trying to introduce the new tax regime, under which GST will subsume most of the indirect taxes of the Centre and the states.

"As asked by the Finance Minister, we will go and try to convince the states and also take their ideas to the Centre... and convince them that whatever apprehensions they have would be all covered (in the GST)," Ficci's new President Harsh C Mariwala told reporters here.

Mariwala said states which are opposing have some "unnecessary fears" and apprehensions regarding its implementation, "we will try to remove them".

GST will do away with most of central indirect taxes such as excise and service tax level, and VAT as well as subsume local levies like octroi and purchase tax at the state level.

The proposed tax is mainly opposed by the BJP-ruled states on the ground that it would affect their autonomy. Besides, they do not want the Centre to levy sales tax, which is currently in the domain of the states.

"There will be more tax collections after GST implementation," he said, adding that during a recent lunch meeting with a group of BJP Members of Parliament, he found them to be receptive to the idea.

"During the meeting, they hinted that this time they might support it," he said.

The government has said it may not be possible to roll out the GST from April next year as the proposal needs consent from all the states.

Talking about rising inflation, he said allowing foreign direct investment would help in containing the headline numbers.

He also said there is a need for a comprehensive Food Security policy to rein in rising food inflation. Food inflation falls to 10.39% for week ended February 19 from 11.49% in the previous week.

On the government's national manufacturing policy, Mariwala said the policy is expected to come by April.

"Ficci is closely working with the Commerce and Industry Ministry for the policy," he said, adding currently inter-departmental consultations are in progress in the ministry.

The government aims to take the share of manufacturing sector, which contributes over 80% to the country's overall industrial production in GDP from about 16% to 25% over a period of 10 years.

Under the upcoming policy, the government has proposed to set up integrated greenfield mega-investment zones to attract global investment and latest technologies.

Mariwala also said the interest rates would not be hiked to an extent that it starts impacting the growth of industry.

Asked about the impact of forward trading of some commodities in creating scarcity, he said: "Futures trading of most commodities is very low and so there has been no impact. There has to be depth in trading of such commodities and only then can we say something about it."

Speaking on the occasion, HSBC India Country Head Naina Lal Kidwai, who has been elected the Vice-President of the chamber, said energy security would be a paramount concern for the country in the years to come.

"India should diversify into other energy sources so that we are not left to rigours of price movement of a product, 70% of which we import," she said.