CII Releases 20-point Agenda To Mitigate Impact of West Asia Crisis

New Delhi: Leading industry body CII on Sunday outlined a 20-point agenda to mitigate the impact of the West Asia crisis, calling for measures including a temporary exemption from long-term capital gains tax for foreign investors in the primary market, the introduction of a time-bound conflict-linked emergency credit line guarantee scheme (CL-ECLGS) and a three-month moratorium and restructuring window for MSMEs.

The CII has also proposed that priority sector lending (PSL) norms may be revisited to enable banks to respond more flexibly to sector-specific stress during external disruptions. “The RBI could institute a Special Refinance Window for MSMEs and other affected sectors, among other measures, seeking their consideration by the government,” the CII said.

To sustain foreign capital inflows into primary markets during a period of heightened global uncertainty, the industry body said that the ministry of finance could consider a temporary exemption from long-term capital gains tax for foreign investors in primary market investments, with the qualifying holding period extended from two to three years. “This calibrated incentive would signal stability, encourage patient capital, and help offset any flight-to-safety sentiment triggered by the disruption,” it said.

The CII also suggested that the finance ministry may consider introducing a time-bound CL-ECLGS, similar in spirit to the emergency credit line guarantee scheme implemented during the pandemic, so that additional collateral-free working capital can be extended to affected enterprises through government-backed guarantees, particularly targeting MSMEs, exporters and gas-dependent sectors.

The CII also called upon RBI to consider a temporary and clearly defined three-month moratorium and restructuring window for MSMEs, especially exporters and ancillary units linked to export supply chains. “This may include calibrated flexibility in asset classification norms, with a defined deferment before Special Mention Account (SMA) and non-performing asset (NPA) recognition is triggered, limited to sectors where disruption is demonstrable,” it said.

Moreover, it said, the RBI could institute a special refinance window for MSMEs and other affected sectors, complemented by targeted liquidity support through instruments such as targeted long term repo operations, thereby enabling banks and non-banking financial companies (NBFCs) to continue extending credit at reasonable cost to productive sectors.

“Besides, the finance ministry in conjunction with RBI could provide immediate contractual and operational relief to industry, especially MSMEs, by extending delivery timelines for central and state PSU contracts by 3-4 months without invoking liquidated damages clauses, reduce performance bank guarantee and security deposit requirements to minimal levels to ease liquidity constraints,” it added.