Industry body Confederation of Indian Industry (CII) on Sunday unveiled a 20-point action plan to cushion the Indian economy from the fallout of the West Asia crisis, urging a coordinated fiscal, financial and trade response.
Key recommendations include a temporary exemption from long-term capital gains tax for foreign investors in primary markets, the rollout of a time-bound Conflict-Linked Emergency Credit Line Guarantee Scheme (CL-ECLGS), and a three-month moratorium with restructuring support for MSMEs.
CII suggested revisiting priority sector lending (PSL) norms to give banks greater flexibility in addressing sector-specific stress arising from external shocks. It also proposed that the Reserve Bank of India (RBI) introduce a Special Refinance Window for MSMEs and other affected sectors.
To maintain foreign capital inflows during heightened global uncertainty, CII recommended that the Ministry of Finance consider temporarily exempting foreign investors in primary markets from long-term capital gains tax, while extending the qualifying holding period from two to three years. According to the industry body, such a move would signal policy stability, attract long-term investments, and counter any flight-to-safety trends triggered by the crisis.
Also read: High crude oil prices drive surge in ethanol demand
The proposed CL-ECLGS, modeled on the pandemic-era Emergency Credit Line Guarantee Scheme, would provide additional collateral-free working capital to MSMEs, exporters, and gas-dependent sectors through government-backed guarantees.
CII also called on the RBI to introduce a clearly defined three-month moratorium and restructuring window for MSMEs, especially exporters and supply chain-linked ancillary units. This could include temporary flexibility in asset classification norms, delaying the classification of stressed accounts as Special Mention Accounts (SMA) or Non-Performing Assets (NPA) for sectors demonstrably affected.
Further, the RBI could support liquidity through a Special Refinance Window and targeted tools such as Targeted Long-Term Repo Operations, enabling banks and NBFCs to continue lending at reasonable costs.
The industry body recommended immediate operational relief measures, including extending delivery timelines for Central and State PSU contracts by 3–4 months without invoking penalty clauses, and reducing performance bank guarantee and security deposit requirements to ease liquidity pressures. Temporary relief in electricity tariffs was also suggested to offset rising input costs.
Additionally, banks could be allowed to reassess and increase working capital limits—by up to 20 per cent—for export-oriented and gas-reliant units facing temporary disruptions, along with concessional lending terms. CII also proposed waiving or reducing administrative banking charges such as loan processing fees, forex handling costs, and documentation charges for affected sectors.
To improve liquidity, it called for wider adoption of the Trade Receivables Discounting System (TReDS) across industrial clusters and faster clearance of pending GST refunds, duty drawback claims, and RoDTEP dues.
Chandrajit Banerjee, Director General of CII, noted that the government and RBI had acted swiftly to stabilise sentiment, but warned that supply-side pressures in energy, logistics, and trade continue to weigh on businesses. He emphasized that MSMEs, exporters, and energy-intensive industries remain under stress despite initial interventions.
Drawing from India’s past crisis management experience, CII stressed the importance of coordinated fiscal and monetary measures in strengthening resilience. It suggested that the next phase of policy response should focus on liquidity support, credit access, trade cost reduction, and foreign exchange stability.
Finally, CII recommended a temporary rationalisation of taxes and duties on energy inputs, including a waiver of the roughly 2.5 per cent customs duty on LNG imports, to ease cascading cost pressures during the ongoing disruption.
Follow us
