People from all walks of life are eagerly awaiting Finance Minister Nirmala Sitharaman’s Budget 2022-23. Everyone seems to be asking – would Nirmala Sitharaman’s budget meet the hopes and aspirations of all the stakeholders particularly in today’s taxing times. Here is what the industry expects:
Yash Jinendra Munot, VP, AIFI (Association of Indian Forging Industry):
This year, there are expectations of a good, progressive, and balanced budget from all MSME’s, including the forging industry, due to the rough patches the industry has seen with current chip shortages and the pandemic and keeping in mind that the industry has not fully recovered with the heavy investment done for BS-VI implementation. As the industry faces a large cash flow block with some value-added products at 28%, this budget should consider rationalisation of the GST rates, which should be uniform at 18%. Additionally, import duties on steel should be reduced to meet the current shortfall and competitive Indian steel prices. Furthermore, as part of the ‘Make in India’ initiative, Indian companies should be eligible for a benefit on the Duty structure.
The government has made continuous efforts to simplify and streamline Indian tax laws, and the industry anticipates consistency in tax and regulatory policies, as well as their interpretation, this year. To achieve Industry 4.0, funds should be allocated through FDI schemes and new investment allowances to encourage investment in technology. We also anticipate that the scrappage policy, which is currently being held up by the finance ministry, will be passed to boost demand in all segments of the auto sector while achieving pollution goals. Thus, incentives for scrapping old and purchase of new vehicles should be implemented quickly.
Ashwath Ram, Managing Director, Cummins India Limited:
India must continue its multi-year spending on infrastructure to sustain growth. We cannot slow down spending even if it is slightly inflationary in the short term. More support is needed for Manufacturing as we are still reeling under the effects of Covid-19 to sustain long term growth and capital buildup. Liquidity is important for manufacturers to get capital at cheaper rates to invest in equipment for growth. Exporters need to be encouraged by SEZs coming into Remission of Duties and Taxes on Exported Products (RoDTEP) and the rates of payouts from the schemes to match the actual double taxations costs. Manufacturing of electrolyzers for H2, H2 in ICE and Flex fuels engines production equipment should come under the PLI scheme. Further, exports focused projects in Manufacturing need some incentives for better scalability and business sustainability.
Farrokh Cooper, Chairman & Managing Director, Cooper Corporation:
The forthcoming Union Budget for 2022 should emphasise measures to help the Indian economy recover from the pandemic and to boost consumption-led demand. The auto industry expects relief from the Union Budget in multiple areas. To achieve sustainable growth, business communities should be encouraged to invest more in industry and businesses. I believe that the government should fix industry income rates for at least five years so that industrialists can make long-term financial planning and take appropriate decisions about investment in their industries.
Furthermore, the government is now encouraging businesses to establish large industries, and they should be treated equally with medium and small industries in terms of receiving timely payments from the government and private sectors so that they can pay small and medium enterprises. Furthermore, the government should priorities managing inflation and lowering the cost of raw materials and fuel. To boost exports, existing incentives must be increased. There is also a need to accelerate the GST refund procedure to provide liquidity to the industries. The industry is also eagerly awaiting news on the scrappage policy. Given the current market conditions, we anticipate significant initiatives to revive growth and boost investor confidence in the upcoming Union Budget.
Rahul Raj, Founder & CEO FloBiz
MSMEs contribute to 30% of our GDP, account for over 45% of EXIM activities and employ more than 11 Cr people – this is a testimony to the importance of MSMEs in our economy. The fact that this sector at large continues to be non-digital and heavily dependent on manual operations has exacerbated the impact that the pandemic has had on the MSMEs.
In the wake of the 2022 Budget, we expect a special focus from the government to help this sector recover & accelerate overall economic growth. This can come in the form of funding support to NBFCs to maintain liquidity & promote financial inclusion with a distinctive focus on MSMEs under priority sector lending. In addition, reduction in GST rates and relaxation in compliance burden for MSMEs around taxes, audits & loans will go a long way in helping this sector regain its lost momentum.
Moreover, we hope this upcoming budget will lay out initiatives for infrastructure development that can further promote trade & commerce in the country. The government also needs to encourage institutions & start-ups aiming to establish digital frameworks for e-KYC, online payments, digital banking & lending with a special focus on this sector.
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Budget 2022: what does the industry want #1
Budget 2022: what does the industry want # 2
Anurag Garg, Managing Director & Country Head, Vitesco Technologies, India:
The Union Budget 2022 is the most anticipated budget for the Indian automotive and manufacturing sector. To take the overall automotive industry and retail trade back on the path of growth, the Ministry should regulate and reduce GST rates on two-wheelers to 18%. It is important to note that the two-wheeler is a necessity to travel distances by lower class and rural segments for their daily working needs. The market is very volatile, and the automobile prices are increasing every 3-4 months due to incessant price hikes in metals and various other issues, a reduction in GST rate will counter the price hike and aid in shooting up the demands in the market.
We are further awaiting more light on production-linked incentive (PLI) schemes extended for electric vehicles and advanced technology components, the vehicle scrappage policy, and announcements of PLI scheme for semiconductors are major positive steps. These have the potential to boost demand and resolve supply chain disruptions for the industry. The PLI Scheme will get a better push to boost manufacturing and attract investments in the automotive sector, benefitting us in the long run. The increase in customs duties in some sectors is designed to push self-reliance and localization. As we look towards a future with electrified automotive, localization will definitely help in cost optimization in the future. Though it might create initial challenges through price hikes and demand generation, it will be better for our economy in long run.
Additionally, the focus on renewable energy is welcome. The Hydrogen Energy Mission and focus on solar energy will help meet our energy requirements in the future adequately. Health outlay in the budget has increased by almost 100% considering the pandemic situation, this will help us to uplift the health infrastructure in both urban and rural segments of our country.
Shivam Sinha, Founder and CEO of Indiassetz
India is going through another wave of pandemics, it is crucial to closely examine and redefine the wealth, investment, and tax reforms of the country. To keep the growth intact, tax policies on investments in global stocks and foreign direct investments should promptly be reviewed. While the tax revenue is of crucial importance to the recovery of the Indian economy, a balanced approach towards GST, property tax liability and stamp duty will play a very important role in determining an average Indian’s ability to invest in the real estate sector. Starting from the remotest of areas in the country, a focus on investments in townships and infrastructure is equally important to help the Indian economy rise back to its full potential
