It urged the government to invest on infrastructure, pledge incentives to encourage energy productions and announce special packages for small, cottage and micro industries. [break]
“The budget for 2011/12 should provide income tax holiday to all micro, cottage, small industries,” said Hari Bhakta Sharma, vice president of CNI that gave its inputs for the new budget to the finance minister on Thursday.
CNI suggested the government to encourage industries to invest on infrastructure of their factory sites and allow them deductions from income tax, VAT and excise, among others liabilities until the cost is recovered.
Referring to rapid fragmentation and increasing cost of land, which have made land pooling difficult, CNI urged the government to develop industrial zones and lease out the space to scattered industries and the upcoming ones.
It also laid emphasis on formulating human resource development policy to enhance productivity of the Nepali work force.
In order to support industrial development, CNI pushed the government to immediately enact Board of Investment Act, Special Economic Zone Act, Foreign Investment and Technology Transfer Act, Anti-Dumping Act and Negotiable Instrument Act.
Referring to current industrial gloom, CNI has asked the government to provide income tax holiday of 5 to 10 years for manufacturing sector and industries that fall under national priority.
CNI has also asked the government to limit interest rate for manufacturing industries at a maximum of 10 percent. It has also sought effective vigilance of Nepal Rastra Bank to restore credibility of the financial institutions in the market.
For exports promotion, it has suggested that the government should retain the existing program of providing cash subsidy to exports earning hard currency. It even asked the government not to impose tax on earnings made from exports.
CNI also urged the government to provide financial support for the development of 19 products and services, which have been identified by Nepal Trade Integration Strategy (NTIS) as exportable commodities with high potential.
As power crisis continues to hurt industrial output, Sharma demanded that the government develop new power grids exclusively for industries and hire 100 or more Nepali workers for the same. He even sought the government to allocate Rs 500 million for developing such grids, so that large industries could get uninterrupted power supply.
CNI also suggested to the government not to seek sources of income on investments made in the power sector. It sought the government to waive all forms of taxes imposed on the hydropower development and declare hydropower investments as tax-free zone in order to lure both domestic and foreign investments.
He also suggested the government to waive off customs and VAT imposed on diesel, particularly referring that most of the industrial corridors fulfill power supply through diesel plants.
CNI also advocated for a cut in customs duty on raw materials, waive off duties on import of generators, voltage control machines and alternate energy equipments by the industries. It also pushed for the introduction of multiple VAT rates and elimination of VAT threshold, which stands at Rs 2 million.
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