New Delhi: While projecting a better growth rate in the year ahead, Finance Minister Arun Jaitley on Monday admitted that manufacturing remained a challenge but also hinted at tax reforms to boost sentiments in India.
Speaking at the 'Make In India' event in New Delhi, Jaitley said the government is taking steps to ensure economic growth rises in 2015. Blaming high cost of capital for slowdown in manufacturing sector, he pitched for removal of entry barriers and a globally competitive taxation regime to attract investments and boost growth.
"We have to put house in order," Jaitley said, to accelerate the growth, as the manufacturing sector was not growing as per its potential and radical steps might be required to revive growth in this key segment, although as results will not be visible overnight.
He, however, said Indian economy may improve slightly after two years of slowdown and the next fiscal will be even better.
"The entry point into the manufacturing sector itself has to be eased. Our initial barriers have to be lowered and perhaps even removed. If we keep the doors closed investments won't come in," he said.
Jaitley said tax regime should be compatible with rest of the world as when people buy goods "they do not like to purchase taxes along."
Stating that manufacturing will remain a challenge unless radical steps are taken, he said cost of capital is the single factor that has in recent times slowed manufacturing.
On ease of doing business, the Finance Minister said, "What is it that has happened in the last few years that added to complication of doing business (in India). Was it the uncertainty over the tax administration (that) has scared investors away? Has it not resulted in close down of plants which were comparable to global competitors?"
Referring to the tough Land Acquisition Act, he said the law itself is going to add to the complications for investors.
"Danger would be if we lost out on cost, if we lose out on quality then we will be faced with a situation, where we become a nation of trader rather than a nation of manufacturer," Jaitley said.
He said there was a need to ensure liquidity in the markets. "We need to ensure capital is available we need to ensure that those sectors which are starving we are in a position to provide adequate capital to those industries."
Jaitley said that the success of bankers' retreat with Prime Minister Narendra Modi later this week and the Make In India campaign will give a fillip to manufacturing.
(With inputs from PTI)
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