Budget 2025 is a gentle nudge for India Inc to start capex cycle 

Additionally, the FM also announced several incentives to boost domestic manufacturing and export competitiveness for domestic companies, particularly the Medium and Small Enterprises (MSMEs).

The Union Budget is a gentle nudge for Corporate India to kickstart the private capex cycle, which has been languishing for a long time now, experts said on February 1. Finance Minister Nirmala Sitharaman announced a slew of measures, which included a waiver on personal income tax on incomes up to Rs 12 lakh, to boost consumption.

Several incentives to boost domestic manufacturing and export competitiveness for domestic companies, particularly the Medium and Small Enterprises (MSMEs) were also announced in the Budget 2025.

The minister’s announcement to support and promote Industry 4.0 with active participation of the youth of the country is very critical. Development of Global Capability Centres (GCCs) in Tier 2 cities will go a long way in the development of the overall economy, Anil Talreja, Partner, Deloitte India, said.

“With Industry 4.0 and GCC the full ecosystem, be it hospitals, townships, roads, transport, infrastructure, (and) entertainment centers, and all other peripherals will get developed,” he said.

Domestic manufacturing

To further boost domestic manufacturing, Sitharaman said the government would set up a National Manufacturing Mission covering small, medium, and large industries for furthering “Make in India” by providing policy support, execution roadmaps, governance, and a monitoring framework for central ministries and states.

The support would be provided to develop domestic manufacturing capacities for the Indian economy’s integration with global supply chains. Sectors would be identified based on objective criteria.

“Facilitation groups with participation of senior officers and industry representatives will be formed to select products and supply chains,” the minister said.

The government has also proposed to support clean-tech manufacturing, aiming to improve domestic value addition and build the domestic manufacturing ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high-voltage transmission equipment, and grid-scale batteries.

The Budget proposes to add 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing to the list of items exempt from customs duties. “This will boost the domestic manufacture of lithium-ion batteries, both for mobile phones and electric vehicles,” she said.

Infrastructure investments

The minister said that each infrastructure-related ministry will come up with a three-year pipeline of projects that can be implemented in the PPP (public-private partnership) mode. “States will also be encouraged to do so and can seek support from the IIPDF (India Infrastructure Project Development Fund) scheme to prepare PPP proposals,” she added.

Ease of Doing Business

With an eye on removing hurdles that slow down the private sector’s growth and investments, the finance minister said the government will set up a high-level committee for regulatory reforms for a review of all non-financial sector regulations, certifications, licences, and permissions.

“The committee will be expected to make recommendations within a year. The objective is to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business,’ especially in matters of inspections and compliances. States will be encouraged to join in this endeavour,” the minister said.

Private corporate capex in 2014-15 was Rs 1.46 trillion, declining to Rs 1.38 trillion in 2015-16. It saw a slight recovery to Rs 1.43 trillion in 2016-17 but dropped again to Rs 1.33 trillion in 2017-18. The trend continued with Rs 1.46 trillion in 2018-19, Rs 1.42 trillion in 2019-20, Rs 1.33 trillion in 2020-21 and further down to Rs 1.28 trillion in 2021-22.