Business Organizations USIBC, CII Euphoric Over Modi led BJP Victory in Indian Elections

Narendra Modi Addressing an election rally at Kolkata, India

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Washington, DC – The business organizations across the United States and India applauded as the Indian opposition party led coalition romped home with a landslide victory on the promises of business friendly, good governance.

Both the Washington based US-India Business Council (USIBC) and the Confederation of Indian Industry (CII) from New Delhi, congratulated India on concluding the world’s largest democratic elections and felicitated the Bharatiya Janata Party (BJP) as it led the National Democratic Alliance (NDA) to a stellar performance.

On behalf of USIBC’s member companies and its Board of Directors, USIBC Chairman Ajay Banga, President and CEO, MasterCard said, “Our heartfelt congratulations go out to the people of India and to Mr. Narendra Modi and the NDA. USIBC member companies stand ready to roll up their sleeves and get to work with the new government to advance the US-India partnership and deepen bilateral economic ties.”

Highlighting that both the democracies, “have deep pools of entrepreneurial talent and energy, and both countries need to stimulate economic growth and create new jobs,” Banga of USIBC said, “The keys to attracting much needed investment are predictability and transparency. When these fundamentals are consistently applied, particularly to areas like tax and intellectual property, business will boom for both countries.”

With the bilateral trade currently standing at $100 billion, Banga was optimistic of future trade increase of five-fold noting, “if we work together as partners and avoid protectionist tendencies.” “We must allow for the free movement of skilled professionals, and lift FDI caps in important sectors like insurance and defense,” Banga added.

The CII went a step further and listed major issues on which it would like to partner with policymakers for action. As a preface to the list of issues, Ajay Shriram, President, CII said, “CII has worked closely with NDA in its previous term in Government as well as at the state governments. We extend our full support to the new Government and greatly look forward to engaging with its leaders including Shri Narendra Modiji in the next five years.”

Reminding that CII partnered with the Gujarat state government in the Vibrant Gujarat series of investor summits for several years and has benefited from the guidance and leadership of Shri Modi, Shriram said, “With prudent macroeconomic management, CII expects that the economy could recover to 6.5% GDP growth rate in 2014-15 as against an estimated 4.9% in 2013-14. Continued reforms could take GDP growth rate to 8% level in three years.”

Chandrajit Banerjee, Director General, CII called the newly elected leadership to take, “the tough decisions that are urgently needed to revive economic growth,” and get the cleared projects operational. “CII is ready with detailed recommendations for new ministers which it would present when the new Cabinet is constituted,” added Banerjee.

CII listed top issues on its agenda to partner with the new government:

· Introduction of GST – CII has suggested a comprehensive GST with a low rate and covering all goods and services that would boost industry.

· Fiscal consolidation and containment of subsidies – Industry would expect the Government to adhere to fiscal deficit targets and bring out a roadmap for achieving them.

· Containing inflation by addressing supply-side bottlenecks – CII has called for better laws governing marketing of perishables and other agricultural products and greater investment by the private sector in cold chain, storage and marketing infrastructure in PPP mode.

· Monetary easing – CII strongly calls for reduction in the repo rate by 100 bps during the current year.

· Stable and competitive exchange rate – India needs to guard against volatile short-term flows and protect its currency to promote exports.

· Mining – CII expects a strong intervention and co-ordination to resolve multiple issues in the mining sector relating to allocation of natural resources, involvement of private sector and availability of fuel for power sector.

· PPP – An institutional mechanism to renegotiate the terms of concession in Public Private Partnership contracts in infrastructure could help resolve stuck funds.

· Governance and administrative reforms – CII recommends expansion of e-governance to simplify administrative processes and clearances. These should help to improve and facilitate the environment for doing business, said CII.

· Promoting employment – Restructuring labour laws including introduction of Fixed Term Employment for industry to hire manpower on short term assignments would help to create new jobs on a large scale.

· Ease of Doing Business: CII is of the opinion that India needs to move up significantly on the ease of doing business index, on which India is ranked 134 out of 189 countries assessed by the World Bank. The time bound target should be to reach top 10.

· One of the biggest issues that industry has had to grapple with in the recent past has been retrospective taxation. CII would urge the new government to ensure that no retrospective changes are made to tax policies in the future.

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