India must take urgent measures like issuing sovereign guaranteed bonds and exempting FIIs from short term capital gains tax to stem the rupee’s slide, India Inc said on Wednesday..
“Consideration has to be given to issuing a sovereign guaranteed bond which would be of a substantial amount. Additionally, we need to explore if FIIs can be exempt from short term capital gains tax,” CII President Kris Gopalakrishnan said.
President of PHD Chamber of Commerce and industry Suman Jyoti Khaitan said issuing of sovereign guaranteed bonds was a good short term measure.
“While the Government and the RBI have been taking measures to curb speculation, more needs to be done on this front to remove the avoidable edge to volatility,” CII said.
Stressing that foreign institutional investors (FIIs) must be reassured through appropriate action by the Government, corporate India said the solution lies in correcting the current account deficit (CAD) by building a robust exports sector and strong domestic manufacturing base.
“You have to increase supply by investment in capital goods sector. Moreover, export sector must be given a boost to reduce the CAD,” Khaitan said.Besides, the industry believes the Government must refrain from announcing any measures that can be viewed as “unfriendly for business”.
“Foreign investments in the retail sector can be brought in through the creation of a Real Estate Investment Trust. We also need to ensure that no part of the Government announces any measures, which would be viewed as business unfriendly,” Gopalakrishnan said. Meanwhile, industry body Assocham suggested that India convene an urgent meeting to engage policy makers from other emerging market economies (EMEs) to tackle the impact of US Federal Reserve’s actions on the rupee.