Government should scrap various surcharges, fringe benefit tax (FBT) and education cess imposed on the industry to achieve a growth rate of 15% in the manufacturing sector, said industry body Assocham.

Indian firms currently pay taxes that are among the highest in the world, also the tax structure is prohibitive to growth in the industry.

The tax rates for Indian firms including surcharge, education cess and a fringe benefit tax ranging between 4 to 6% amounts to 38%. This again is without considering the dividend distribution tax (DDT) which Indian firms are liable to pay on dividends declared.

``There is a definite case for the removal of the surcharge. Typically surcharges are for specified purposes and for a period of time. But what tends to happen is that it becomes a levy charged for time immemorial``, said D S Rawat, secretary general, Assocham.

Trade policy approach should be to create an enabling business environment to promote large- scale investment for expanding manufacturing capabilities and increasing higher value added exports.

Technological upgrading of India`s exports will not be possible without a considerable emphasis by the corporate sector on in-house R & D activity, Assocham said.

The government needs to examine the desirability of more direct incentives to R & D activity to further the international competitiveness of national enterprises as a part of strategic trade policy. Connectivity between agriculture and manufacturing sector can be the engine for high employment growth, it added.