An Assocham delegation led by its alternate president K P Singh met the union finance minister Yashwant Sinha on Friday and stressed the need for stepping up capital and public expenditure, particularly in the infrastructure sector.

The delegation said that the package should focus on housing and construction activity which provides large employment opportunities and also generate demand for basic goods. Singh said that 100 per cent cost of construction should be allowed as a deduction from the assessees' gross total income over a period of five years.

Capital gains should be exempted if invested in acquiring built-up properties whether residential or otherwise, even when more than one property is already owned.

The delegation also called for pruning of non-planand administrative expenditure, phasing out of non-merit subsidies, privatising PSUs, avoiding budgetary support to them and stepping up long-term domestic savings.

In the direct taxes arena, Assocham has suggested non-levy of capital gains or gift tax on de-mergers, splitting, reconstructions and spin-off withdrawal of restrictions on unabsorbed depreciation and reintroduction of investment allowance.

``Indian industry is currently facing uneven competition from transnational corporations. The all-too sudden reduction in import tariffs to an average of 20 per cent from over 100 per cent has made imports much cheaper whereas the cascading effect of excise duty, high cost of capital and infrastructure inefficiencies have adversely affected the cost of domestic output. There is also an inverted duty structure which does not encourage domestic value addition,'' said a chamber press release.

``It is therefore necessary not to reduce the import tariffs further for at least two years. The tariff commissionshould also reconsider the import tariffs on products where duties have been brought down below the WTO commitments,'' demanded Assocham.