Cut excise duty on fuel to reduce inflation: CII

The Confederation of Indian Industry (CII) has urged the government to reduce excise duty on fuel to reduce inflation and boost disposable incomes.

The industry body suggested slashing of excise duty on petrol and diesel to boost consumption in its consultation meeting with Finance Minister Nirmala Sitharaman.

CII also recommended reducing marginal tax rates for personal income up to ₹20 lakh per annum to trigger the virtuous cycle of consumption, higher growth and higher tax revenue.

The industry body suggested increasing the minimum wage rate under MGNREGS from ₹267 per day in FY24 to ₹375 as suggested by the ‘Expert Committee on Fixing National Minimum Wage’.

This comes at a time when fast moving consumer goods companies and automakers have reported slowdown in urban consumption.

“Despite some softening of domestic demand in the first half, progressive recovery is expected,” says CII. Global uncertainties including excess capacity in China and climate emergency and consequent food inflation are clearly challenges, it says.

CII urged the Centre to build on the “success in manufacturing” in certain sectors by launching similar targeted interventions for sectors with large-scale employment potential like readymade garments, footwear, furniture, tourism, real estate and construction etc. These include granting infrastructure status to tourism, expedited FTAs with the E.U. and U.K., lower duties on imports of raw material like cotton. Labour reforms will go a long way in unlocking the potential of such labour intensive sectors, it says.

It recommends integrating India into global value chains by adopting a 3-tier customs tariff structure with inputs at 0-2.5%, intermediates at 2.5-5%, and final goods at 7.5% over a period of time, with certain exceptions.

CII also suggested boosting MSME growth which is the largest employment generator. “Upgrading Udyam Portal as a one-stop platform to ensure ease of compliances, besides linking with business applications such as GeM, TReDS, SAMADHAAN portals and also ONDC to promote Market linkages,” it says.

The industry association exhorted the government to continue focus on capex and fiscal consolidation which will have a multiplier impact on the economy, including sectors such as construction and real estate. “Increase capex spending by 25% over the ₹11.1 lakh crore budget for FY25, with enhanced focus on rural infrastructure. In particular investments in irrigation could target coverage of 80% of gross cropped area by 2030,” it says.

CII estimates that a sharper contraction in fiscal deficit could impact demand, urging the Centre to target fiscal deficit at 4.5% for FY26. “Debt targeting from FY27, with glide path to bring Central Government’s debt to below 50% of GDP by 2030-31. This is likely to have a positive impact on India’s sovereign credit rating and interest rates,” it says.

CII advised the Centre to augment revenue by divesting government stakes in select PSEs to retain 51% to unlock about ₹10 lakh crore which could be utilised for – enhancing public capex, retiring government debt, and setting up a sovereign wealth fund for investing in strategic assets overseas towards acquiring critical technologies and minerals. It proposed the launch of National Monetisation Pipeline (NMP) 2.0 for the period 2026 to 2030 with a target of ₹10 lakh crore.

CII also batted for rationalisation of subsidies. “On food subsidy, as per an ICRIER study, there is a 28% leakage in the PDS system. Building on the tremendous work on digitation, we suggest the government provide direct income support to PDS beneficiaries through DBT enabling them to buy food as per their requirement,” it says.