Officials from the union finance ministry, which is currently headed by the Prime Minister, have held a meeting with representatives from the mutual fund industry and the Securities Exchange Board of India (SEBI) to discuss ways to boost growth in the sector.

The mutual fund companies want to pass on the burden of 12 per cent service tax on the purchase of schemes to the consumers. Upendra Kumar Sinha, Chairman of SEBI, had earlier expressed concerns over the health of the mutual funds' industry in the country.

The mutual funds' industry has been affected by leaving investors and difficult domestic as well as global economic environment. The Indian mutual fund industry sank by as much as 16.5 per cent as its assets under management (AUM) fell from Rs 703,669 crore in March 2011 to Rs 587,659 crore in March 2012.

He also said that the market regulator had suggested to the government to route the investments under the Rajiv Gandhi Equity Savings Scheme through mutual funds. The industry members have also asked for managing the assets of insurance companies, floating pension schemes with tax incentives.