Union Budget 2021: Manufacturing sector expects tax reforms, support for expansion of distribution, supply chain
As India moves ahead on its growth trajectory, with partial recovery from COVID-19, a strong impetus in manufacturing through the Union Budget 2021 is crucial
In its December State of the Economy report, the Reserve Bank of India (RBI) revealed that the nation is emerging from the economic slump much faster than anticipated. As India moves ahead on its growth trajectory, with partial recovery from COVID-19 , a strong impetus in manufacturing through the Union Budget-2021 is crucial, say major players in the sector.
Here is the manufacturing sector wishlist:
Chandru Kalro, Managing Director, TTK Prestige
I would like to see the government turn its attention from rural to the urban middle class. I believe tax breaks for the salaried class will be immensely beneficial, including steps to support the housing market. At this time, the middle class need all the help they can get as they have been badly impacted. I would also like to see the Finance Minister promote exports, in keeping with the ‘Make-in-India’ and anti-China sentiment. For our industry, I would welcome PLI schemes to provide an impetus to India’s manufacturing prospects and the kitchenware industry. Any support when it comes to ease in GST compliance is also something that I am looking forward to.
Rajesh Uttamchandani, Director, Syska Group
We believe the government can offer support to the manufacturing industry through tax reforms and by supporting the expansion of distribution and supply chains. Further, the government could also look at mitigating the legal procedures involved in establishing manufacturing facilities in the country, under its ‘Atmanirbhar Bharat’ initiative. Last year, the production incentive scheme (PLI) scheme was announced with an aim to offer opportunities for home-grown and international electronic businesses to improve their manufacturing competences in India. We are confident that government will consider this sentiment and enable India-based organisations to avail of benefits that will help them establish a strong foothold from a manufacturing perspective.
Prakash Chhabria, Chairman, Finolex Industries Limited
We hope Budget 2021 boosts domestic manufacturing across sectors, for a self-reliant economy. We look forward to announcements that will lay emphasis on the progress of the overall agriculture economy. Also, we strongly believe that the government’s objective to double farmer’s income and improve piped water coverage by 2022 is most likely to strengthen both plumbing and agri pipe demand in the near future. The flagship government scheme, Nal se Jal scheme appears to be a major driver of plumbing pipe demand.
Bala Sarda, CEO and Founder VAHDAM India
As an entrepreneur, I expect reduction in Long term Capital Gains Tax on Private Equity and making it at par with the public market. ‘You pay 10 percent tax on investments in stock markets but an entrepreneur pays 27-28 percent tax on a business he has built from scratch’ . There should be stronger subsidies on import of capital goods used for core manufacturing and value addition for exports. The Budget can look into widening the ambit of Special Startup manufacturing zones for companies or startups which want to foray into manufacturing. This would give the government's "Vocal for Local" initiative a timely fillip.
Ashok Rajpal, CEO and Managing Director, Ambrane India
With the ‘Boycott Chinese Products’ initiative, we need to invest heavily in the IT infrastructure and manufacturing industry. Thus, we expect tax reforms for the tech sector so as to invest solely in the country with major manufacturing and operating units. This will ultimately help India to push the limits and grow in the most unexpected ways. However, the rebates and tax reforms can help India to be the ‘hub of manufacturers in electronics, automobile and textile’ in the near future. To give tough competition to leading tech brands worldwide and push post-Covid major setback, ‘Make in India’ initiative should be new normal for the Indians. Empowering and encouraging the MSME’s and small scale manufacturers can lead to a great pool of jobs for the skilled and trained laborers, resulting in acquisition of brilliant minds for creating a ‘self-sufficient India.’
Arjun Ranga, President, All India Agarbathi Manufacturers Association (AIAMA)
One of the key areas that the industry would want the government to address is to extend its support towards expansion of export market as well as incentivising those engaged in exports. The government should look at providing capital subsidies for new units dedicated for exports. Similarly, allowances and reimbursement on legal support and fee for registering Indian brands abroad, fiscal support on action taken to counter the duplicate and pass off products abroad. The government should also look at create a mechanism that appreciates and gives growth based incentives. Offering an additional weightage of Atmanirbhar Allowance of 50% under the Income Tax Act on the cost of materials consumed as well as on the manufacturing expenses incurred in making raw agarbathies. This will provide the much needed relief to the small units who have recently commenced their efforts in making our industry self-reliant and completely indigenous.
KG Prabhu, Chief Financial Officer, Digisol Systems
COVID-19 pandemic and the consequent lockdown had a drastic impact on the Indian economy in 2020, however everyone is hoping that the upcoming budget will improve the situation for the next financial year as India looks to recover from the economic devastation with the rollout of COVID vaccine. As last year the government focused on making India a self-reliant economy, thus, we are expecting that the upcoming budget will have measures to boost domestic manufacturing and introduce policies that will allow global companies to invest and manufacture in India.
Rajeev Karwal, Founder-Chairman, MilagrowHumantech
If we want to be a superpower in the hardware manufacturing of new emerging technologies, we must attract global manufacturers of key components. We must stop incentivising or subsidising finished goods assembly of any electronic, telecom, robotics, or IT product. I suggest giving a ten-year tax holiday to companies which invest in setting up semiconductor fabs. They have an investment starting around $8 billion. The technology needs to be upgraded typically every 3-4 years and have huge operating costs. If we have next-gen fabs in India, we shall also control technology and be intrinsically competitive. If no private player comes, the Government of India must invest in these kinds of ventures.
Sunil Agarwal, Chairman, RSH Global
Packaged food, ready-to-eat products, personal hygiene products like sanitisers and disinfectants were some of the products that did well through the pandemic. While the focus for the Budget this year is likely to be on healthcare, other industries will also need a boost. An increase in government spending and incentives to provide stimulus is going to be the key to market revival. Slashing income tax slabs will put more disposable income in the hands of consumers, which may accelerate consumption. We expect budget 2021 to improve overall consumer sentiment and spur consumption across target classes.
Neeraj Bahl, MD and CEO, BSH Home Appliances
The pandemic induced lockdown has resulted in flat growth for the consumer durable industry last year. In the 2021-22 budget, we are hopeful that there will be a relaxation on personal/income tax which will help boost consumer demand and drive growth for the industry. Moreover, the government should also consider reduction in GST rates for products like dishwashers, dryers, refrigerators and air conditioners, which are now evolving from being luxuries to necessities for consumers. We also hope that the government reconsiders the rebate on tax for second home owners, which will go a long way in boosting real estate and therefore the consumer durable sector.
Sharad Malhotra, President, Nippon Paint India
We are also looking forward to the government incentivising consumers through tax breaks and other measures. We are hopeful of enhanced measures that will increase India's ranking in Ease of Doing Business and meet the government's target to scale up manufacturing to 25 percent of the GDP.
Sameer Katole, CEO, CROSSLOOP
With the government’s push towards domestic electronics manufacturing with initiatives such as ‘Make in India’ and Atmanirbhar Bharat, we can expect a rise in customs duties on electronic products. The government should look at restricting, abolishing or giving control to shareholders for Dividend Distribution Tax. Ecommerce platforms have contributed to the economy and hence law relating to TDS under section 194-O on e-commerce transactions should exclude specific cases from the ambit of this provision. The government can look at making stronger efforts towards maintaining TDS at 75 percent of the applicable rates for the coming fiscal year in order to boost liquidity.
Rahul Sharma, President, Aluminium Association of India and Dy.CEO – Aluminium Business, Vedanta Ltd
It is now even more important to ensure that specific measures are announced in the upcoming Budget which pull the metals sector out of an ongoing challenging phase. The correction of inverted duty structure with reduction of import duties on critical raw materials of the aluminium value chain in the upcoming Budget will go a long way in Made in India aluminium bridging the competitive gap it faces with respect to other major global aluminium producers. With Aluminium production costs in India amongst one of the highest in the world, immediate support pertaining to the rationalisation of power cost by reducing high cess on coal to support power-intensive industries like aluminium is recommended.
Jubin Peter, Founder and Chairman, QThree Ventures
With the right support from the government, we can soon be on the path to becoming the manufacturing hub for the world. I urge the government to incentivise setting up of manufacturing facilities in the country through subsidies, tax holidays; rationalise taxes on TVs, refrigerators, air conditioners. While once considered a luxury, today these products are now essential in most households. Reducing the tax slab will boost demand and thereby enable more sales, helping the economy bounce back faster.
Kishan Jain, Director, Goldmedal Electricals
The government can focus on attracting foreign investment, adopting cutting-edge technology, and enhance exports in order to make India a global manufacturing hub, through its ‘Atmanirbhar Bharat’ and ‘Make in India; initiatives. This in turn will boost employment opportunities for citizens which is the need of the hour in a post-pandemic world. We look forward to policies that will leave more money in the hands of consumers as it will help boost demand in the economy.
Dinesh Aggarwal, Joint Managing Director, Panasonic Life Solutions India
Sustained investment in Infrastructure by the government, constant effort to introduce FDI in manufacturing including electronic components and sub-assemblies, and conscious support for the real estate developers through priority lending; all of these will assist in stimulating the economy, which is still largely dependent on home demand. Also, commodity prices in the past 8 months have gone out of control and are unpredictable. It is expected that some strict measures are taken to diffuse such situations in the near future as it leads to dilution of business confidence.
Raj Shamani, Founder, Shamani Industries
The budget should be favourable to common tax payers. This year they were the one most affected, they are the ones with maximum EMIs, maximum responsibility and expenses on a recurring basis but because of the pandemic, they have seen the lowest days. Providing some relief to the common man is the need of the hour. With this year’s budget, I am expecting some relief in the tax slab for the common tax payers. Given the fact that this is the first budget in the post-COVID, the industry is hoping for concrete measures to revive the economy, ways to increase consumer demand particularly in sectors that were hit hard by the Covid crisis like the retail industry, tourism, hospitality etc.
Avneet Singh Marwah, Director, CEO, Super Plastronics Pvt Ltd
This budget is an opportunity for the government to bring dual reforms to domestic TV manufacturing ecosystem. One, boost local production and manufacturing by removing custom duty on panels, and including televisions under the PLI scheme; and second, drive demand by reducing GST from 28 percent to 18 percent as content consumption patterns have changed in the emerging towns as well.
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