New Delhi: Industry body ASSOCHAM yesterday (Nov 12,2006) said the Government needs to initiate policies that will help increase productive investment to 40 per cent of GDP from 34 per cent at present to hasten economic growth.

"A large portion of this has to be invested on key infrastructure sectors like power, ports, roads, airports, mining and high quality infrastructure for services," ASSOCHAM said in its pre-Budget Memorandum 2007-08.

India needs an investment of almost 320 billion dollars in the next five years to upgrade infrastructure alone for sustained 9-10 per cent economic growth rate.

In addition, a large investment is required to expand manufacturing capacities in thrust areas and rapidly growing export production.

"Therefore, the government should take such policy measures which promote investment," the chamber said.

ASSOCHAM said the government alone cannot mobilise the large resources required for capital investment in the infrastructure sector. Hence, it must increase the role of private sector in building infrastructure, it said.

On the prevailing tax structure, the industry body suggested that key infrastructure areas (power, road, port) should be zero rated for tax purpose so as to reduce its cost.