The PHD Chamber of Commerce and Industry (PHDCCI) has urged the government to scrap long-term capital gains tax on equity investments and halve the short-term capital gains tax rate to 10% from 20%, as it presses for sweeping changes to India's tax and investment framework in its pre-Budget proposals for 2027-28.
The proposals were presented to Finance Minister Nirmala Sitharaman and senior ministry officials at a pre-Budget consultation on Tuesday, with PHDCCI pressing for reforms to strengthen capital markets, ease financing constraints for MSMEs and lower input costs for manufacturers.
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Among its key proposals, PHDCCI has also sought the removal of the 2.5% basic customs duty on imports of liquefied natural gas (LNG), naphtha and heavy petroleum feedstocks, arguing that lower input costs would improve the competitiveness of domestic industries.
On capital market taxation, the chamber has recommended scrapping LTCG tax on equity investments, cutting STCG tax from 20% to 10% and reducing securities transaction tax (STT) rates.
It said the measures would encourage long-term investment, increase market participation and strengthen India's position as a competitive investment destination.
The chamber has also proposed changes to the norms governing the classification of non-performing assets (NPAs) for MSMEs.
It wants the period for classifying overdue loans as NPAs extended from the existing 90 days to 180 days, citing longer working capital cycles and delays in the realisation of payments that often put pressure on smaller businesses.
Higher credit limits under the Pradhan Mantri MUDRA Yojana (PMMY) form another key part of its recommendations.
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PHDCCI has suggested increasing the loan ceiling to Rs 1 lakh under the Shishu category, Rs 10 lakh under Kishore and Rs 20 lakh under Tarun and Tarun Plus categories to account for rising project costs and financing requirements.
The chamber has also called for direct government equity support to MSMEs through the Fund of Funds Scheme, with dedicated allocations for start-up seed capital and participation in SME initial public offerings (IPOs). Such support, it said, would help smaller enterprises access growth capital beyond conventional bank financing.
On credit guarantees, PHDCCI has sought stronger implementation of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.
It has called for stricter compliance by banks to ensure collateral-free lending reaches eligible businesses and proposed a centralised portal to track loan applications and monitor reasons for rejection.
The recommendations come against the backdrop of the significant contribution made by MSMEs to India's economy.
According to PHDCCI, the sector accounts for around 31% of GDP, 48.58% of total exports and 35.4% of manufacturing output. It comprises more than 7.47 crore enterprises and provides livelihoods to approximately 32.8 crore people.
"We acknowledge the Government's initiatives to strengthen the industrial and MSME ecosystem, particularly through improved access to finance, credit guarantees, equity funding and resolution of delayed payments," PHDCCI President Anil Gupta said.
He said changes to NPA classification, higher MUDRA loan limits, stronger implementation of credit guarantee schemes and direct equity support could further strengthen the MSME ecosystem.
PHDCCI Secretary General and CEO Dr Ranjeet Mehta said easier access to credit, equity support, rationalised taxation and effective implementation of government schemes would help accelerate industrial growth and strengthen India's ambition of becoming a global manufacturing hub.
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