62,000 investment proposals awaits govt nod

New Delhi, Dec 14: Even as the Central and State Governments are vying for investments, nearly 62,000 proposals, with average investment worth Rs 25 crore, are awaiting the approval.

Industry body Assocham has found if these 62,000 investment proposals are fructified, they can generate over 18.5 million employment opportunities in the country.

Data on investment proposals obtained from various states and central agencies for a paper on 'Real Issue Is Not How to Generate Employment, But How to Make Investments Happen Faster', has observed that even at 40 per cent fructification of these proposals, investment of Rs 6,440 billion can come through, generating about 7.4 million employment.

The industrial sectors in which 62,000 projects have been submitted by various industrial houses for necessary approvals include food processing, textile and clothing, leather goods, automobiles, auto components, minerals, steel, cement, electronic products and components, paper and paper products, chemicals and allied products and polymers and plastics.

Industry has been waiting for approvals of the proposals for the last 15-18 years, says the Assocham study.

The study paper also recommends that investment climate should improve in India on a priority basis as it takes three-times more time for the fructification of investment in India as compared to developed dountries.

In India, 89 days are required to start a business, 425 days to enforce a contract, 15 per cent of management time is wasted to deal with officials, losses due to electricity outages amount to about 12 per cent of sales and about seven days are spent in clearing customs clearances.

''The government should recognise the role of industry to achieve and put India on a faster growth trajectory,'' the chamber President Anil K Agarwal says.

The paper also highlights that foreign direct investment surge is not happening in India as required. Cumulative FDI inflow from 1991 to Jan 2006 was only 37.7 billion dollars, though recent trends a bit encouraging, the study says.

It recommends that to increase the FDI inflow policy liberalisation like allowing 100 per cent equity is not enough and something more needs to be done.

The study suggests replacement of current Small Scale Industries policy with a suitable Small and Medium Enterprises (SMEs) policy and allow 100 per cent FDI in SMEs under automatic route.

''In order to support and sustain 12 per cent manufacturing growth, purchasing power at the bottom of the pyramid needs nurturing. Need to market products specially designed for the purpose. Evolve in innovate mechanism for investment,'' the paper further states.

For strategic consideration, the paper says that high growth will come from both domestic market and global market and therefore, policy package needs to be evolved for industries, showing high export potential.

The paper seeks increase rate of capital formation to 12 per cent annually and allow easy exit for loss-making units.

The paper asks for fiscal concessions, demanding that income up to two lakh rupees should be exempt for the purpose of taxable income calculation as it will boost domestic demand.

It also demands the reduction of corporate tax rate of 30 per cent including surcharges and complete removal of exemptions as also removal of gift and wealth tax and free depreciation. ''While, customs tariff are being reduced all over, the government needs to introduce a single rate of customs duty in order to eliminate inverted duty structure,'' the paper states.

UNI