New Delhi, Feb 26 (IANS): The government should raise the depreciation rate for energy efficient technologies and plant and machinery to help companies go green and boost private investment, the Confederation of Indian Industry (CII) said Sunday.

"CII advocates a higher depreciation rate of 50 percent in case of retrofitting technologies which are more energy efficient and environment friendly in order to encourage companies to go green," the industry lobby said in its pre-budget memorandum.

Depreciation rate is the rate at which the value of property is reduced to calculate tax deduction.

CII has also recommended that depreciation rates for plant and machinery be raised from 15 percent to 30 percent, at least for a period of two years to encourage more capital investment and the current rates of excise and service tax be retained.

It advocates for exempting capital gains tax on the money received from sale of an asset if the same is reinvested in setting up new business or expansion of existing unit.

CII has also underlined the need for identifying and fast tracking at least 100 mega projects in manufacturing and infrastructure. These could include projects under the Delhi-Mumbai Industrial Corridor or zones created under the National Manufacturing Policy.

The government's plan to attract an average annual investment of $200 billion over the twelfth five-year plan starting next fiscal, according to CII, requires many bold initiatives as 50 percent of the investment is to come from the private sector.

Among various measures to boost investment of this magnitude in infrastructure, CII has favoured reintroduction of Section 10 (23G) of the income tax act which allows exemption of interest and long term capital gains when lent for infrastructure related initiatives.

Similarly, to incentivise companies to go in for research and development (R&D), CII says that a weighted deduction of 200 percent on in-house R&D be extended to all sectors to make India an attractive base for R&D.