Budget 2018 Podcast: Expectations of manufacturing sector

The recent jump of 30 positions in the ease of doing business ranking by the World Bank was very good news for the Indian economy. There is still to be done, of course. A significant reduction in red tape, undertaking challenging reforms, identifying and removing bottlenecks are just some of the most basic steps needed to further improve India’s position as a viable investment destination. A successful, productive manufacturing sector is seen as a must by many experts in India for a vibrant economy. The 2018 budget provides the govt with a ripe opportunity to push for reforms and boost manufacturing in the country.

To provide relief and the required impetus to the corporate and the manufacturing sector, the sectors hope  that government announces some big ticket changes in the budget. According to sources, a rate cut in the Minimum Alternative Tax and Corporate Tax are being studied. Experts believe that corporate tax rates may be cut to 25 percent. Special Economic Zones may get relief from MAT. Many players also expect relief from Dividend Distribution Tax (DDT) and cess.

The first and foremost necessity of the manufacturing sector, they say, is the finance ministry must take steps to revive demand. The manufacturing sector is struggling with excess capacity and is also inhibited from extra capacity due to slow demand. improving the purchasing power of consumers as well as steps like a reduction in personal income tax rates can help put extra cash in the pockets of the consumers and, consequently, increase demand.

Another expectation of the industry from the government is the continuation, and additions, of anti-dumping duties of certain goods from China to protect local manufacturing. Manufacturers also hope for cuts in GST rates and import duty on equipment used in the manufacturing units. This, they say, will also help reduce manufacturing cost and product prices while boosting demand.