India Inc Hopes Jaitley Can Make it Business as Usual
Ajay Piramal and Ashwin Dani are hopeful that new FM will revive growth and drive the economy
India Inc, battered by rising interest rates and policy deadlock, looks forward to an easing of the pain of doing business and measures to spur growth as Arun Jaitley takes charge at North Block.
Jaitley, they feel, faces the biggest challenge in putting the economy back on track. “He is, however, a no-nonsense leader, who will surely not only clean up the atmosphere, but also drive the sagging economy,” said Ajay Piramal, chairman of the Piramal Group. On Monday, Piramal, Kumar Mangalam Birla and Mukesh Ambani were among the business leaders who attended the high-profile swearing-in ceremony of Narendra Modi. The prime minister and the finance minister share a personal rapport with many business leaders. Ashwin Dani, vice-chairman of India’s largest home-grown paint company Asian Paints, said the new finance minister should give priority to reviving growth in the manufacturing sector which will lead to an explosion of jobs. “India now needs more jobs. That can come only by reviving the manufacturing sector. We can also take a cue from the way South Korea has developed its R&D,” Dani said. Dani, who was part of an industry delegation to Seoul with Jaitley when he was commerce minister in the Atal Bihari Vajpayee government, said he should take steps to set up an R&D centre for innovation.
Corporate leaders feel that Jaitley’s understanding of issues will help him solve critical problems. “His recent statement of balancing inflation with expenditure is indicative of how tuned-in he is to the core issues that plague the economy,” said GP Hinduja, co-chairman, Hinduja Group Worldwide.
Investment banker Hemendra Kothari said the most important thing is to create a high sense of motivation for local as well as foreign investors. “I am sure Jaitley with his proactive approach will instill confidence and spur motivation,” he said.
India Inc wants the new FM to simplify taxes and ease the pain of doing business in India. India today holds the reputation for having a most difficult tax regime. The Indian government’s tax disputes with a string of companies, including Vodafone and Cairn Energy, have deterred investors.
“His priorities will be demonstrating fairness to all tax payers, domestic and foreign, simplification, reallocation of resources to ensure end impact and an expansion of the tax base. I expect GST (goods and services tax) and DTC (direct taxes code) in a modified form to be in place in a two-year time frame. No doubt the next budget will be a momentous policy statement,” said Shailesh Haribhakti, chairman, Desai, Haribhakti Group — a Mumbai-based consultancy firm. Sanjay Nayar, CEO of KKR India, said: “A resolution of some of the long-pending tax issues would be an added stimulant for FDI flows.” Indian companies said they face major hurdles in the form of draconian provisions in the new Companies Act. Industry leaders feel that the finance minister himself handling the corporate affairs ministry would make a lot of difference. “Some of the difficult rules in the Companies Act may have to be amended,” said Nimesh Kampani, chairman of JM Financial.
The new Companies Act has put promoters of mid-size companies in a tough position, according to some. “I am sure the new FM, with his profound understanding of issues connected to business, will try to get rid of all regulatory hassles. Things like the new Companies Act are definitely sapping the energy of midsize promoters,” said Vimal Bhandari, MD & CEO of Indo Star Capital Finance.