To counter impact of the recent tax reforms by the President Donald Trump administration in United States (US) on Indian economy as well as for Indian consulting and service providing sector to remain globally competitive the Government of India must contemplate reduction of Corporate Tax substantially and in no event it should be more than 20 per cent.

“ The consulting fraternity of the country already has submitted it’s budget memorandum and expectations including tax reforms and incentives to the Union Finance ministry through FICCI and other National business bodies . These tax proposals if implemented will in the long run strengthen the sentiments of the business community and propel economic growth of the country.” Said Mr K K Kapila, Co-Chairperson, FICCI Infra Committee .

“The recent US tax overhaul is meant to encourage investments and job creation in the US. Many European nations and other developed countries like Britain, Japan, Canada and France are also contemplating similar tax cuts, which will severely impact our service industry. If large economies take this approach, it will prompt us also to have a competitive corporate tax rate” said Mr Kapila.

“The long-term impact of the proposed tax reforms by the Trump administration is going to have an impact on Indian economy. It will hurt exports of goods and services and discourage foreign direct investment to India, The tax cuts (corporate and individual) in India will make Service Sector more competitive by making the proposals against bids more cheaper. “ said Mr Kapila.

“Since the Multilateral Development Banks (MDBs) award projects on Quality-cum-Cost-Basis (QCBS) and their experience of developed world is treated as more valuable, they generally get better marks in Quality of a Proposal. With their costs reduced, their chances of securing projects/works will substantially increase, thereby impacting the developing countries like India.” Said Mr Kapila.

“To remain globally competitive, the Government of India must contemplate reduction of Corporate Tax substantially should accordingly shape domestic tax policy both in terms of direct and indirect taxes so as meet this challenge,” he said.

“The message of the India Inc. to the World Economic Forum at Davos through the Hon’ble PM was to position India as a Statesman and not as a Salesman. With the Indian economy witnessing broad-based improvement across all sectors and looking at 7% growth in the second half of the current fiscal, it is time to project India as an open economy that evokes interest for both the domestic as well as the global audience.” Mr Kapila added.