JOIN USBudget 2019: short on impetus for manufacturing sector
By Ashok Hinduja
The Finance Minister has taken the right direction and has well aligned her budget with the Growth Vision of achieving a $ 5 trillion economy by 2025. While her intent to revitalize the Manufacturing sector, which is facing headwinds with falling demand is noticed, far more support needs to be in put in place to see a turnaround.
The focus on bringing high tech industries to India and create a global manufacturing hub for Semiconductor, Solar PV and Electronics industry is a positive action, long overdue.
Her theme of ease of living and the ease of being compliant in doing business is well intended and if followed up well, can put India on par with global developed economics.
This budget has set the agenda for electric vehicles with some positive actions. Allocation of Rs. 10,000 Cr - FAME II scheme should reduce pollution from the cities and make public transport on Electric Vehicles (EV) affordable.
Lower taxes and the innovative income tax incentive on loan to purchase EVs are expected to bring electric buses, cars and two-wheelers to the roads faster and the resounding impact on the environment is manifold. We hope to see India as the leading hub in the highly evolving EV market.
We hope to see the positive impact of the reforms in the power sector, which is currently seeing pressure. Discoms need to be financially strong if we have to get power to every household. A lot more is expected here.
The Finance Minister has attempted to address one of the long overdue area of incentive for a global scale manufacturing hub and ecosystem for Semiconductor Fabrication, Solar PV, Electronics, etc, by offering an investment based tax incentive. It is important to see the details, if this scheme is attractive enough for serious global players. Indian imports of these products must stop and we must soon be a global source exporting “Designed and Made in India” products around the world.
We hope to see the new simplified and friendly labor laws, so that the smaller factory owners can focus on technology and efficient operations instead of running around for compliance. This will also improve India’s image in the eyes of foreign investors and help India set up global scale manufacturing hubs.
Continuing the momentum on the construction of highways with an allocation of Rs. 140,000 crores investment, upgrades in railways, metro and waterways as well as the various incentives provided for low-cost housing are certainly going to support cement, steel and construction material industry. We hope to see a good impact on the commercial vehicle sector. Incentives to promote low-cost housing will also create a lot of jobs.
We expect the steps the Finance Minister has announced in support of education, skill development, startup, etc will benefit new India’s young and energetic youth which forms India’s demographic dividend.
The support to MSMEs in the form of loans and the portal to make them get their payments easier is a good move and will help create successful entrepreneurs.
Indians skilled in new age technologies as Artificial Intelligence, Robotics, being at par with the best globally should be driving these technologies not only in India but also around the world.
Reduction of Corporate tax for larger companies will encourage capital investment in manufacturing. However, the increase of Income-tax slab to a historical high, since liberalization does not support wealth creation.
Overall, it is a well-intended budget, addressing the aspirations of new India, balancing the needs of rural and urban households, MSME and Corporates, Education and skill development etc. A strong manufacturing sector is needed to reach the goal of $ 5 trillion and we hope to see efficient measures to boost demand.
The author is Chairman, Hinduja Group of Companies (India)