India Budget 2023 – Snippets for the Manufacturing Sector
Describing MSMEs as growth engines of our economy, the Budget proposes enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation. To support MSMEs in timely receipt of payments, the Budget allows deduction for expenditure incurred on payments made to them only when payment is actually made.
Investments in Infrastructure and productive capacity have a large multiplier impact on growth and employment and in view of this capital investment outlay is being increased steeply for the third year in a row by 33 per cent to Rs 10 lakh crore, which would be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20.
The ‘Effective Capital Expenditure’ of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5 per cent of GDP.
o This will Result in a positive impact on the domestic automobile industry
o Putting more money in the hands of the individuals by lowering effective personal income tax rates that should increase consumption and consequently lead to more demand
o The focus on enhancing the yield of extra-long staple (ELS) cotton would help increase the manufacturing of value-added garments and also to reduce import of ELS cotton. The government has identified five new HS Codes for cotton, for further classification of cotton as per staple length. This will help in calibrating policy support for the segments which are import dependent or need further incentivisation.
o Finance minister has indicated government’s focused approach for enhancing the productivity of ELS cotton, by adopting a cluster-based and value chain approach through public private partnerships (PPP) which means collaboration between farmers, state and industry for input supplies, extension services, and market linkages.
o The Economic Survey 2022–23 has shown India’s domestic pharmaceutical market is anticipated to reach $ 130 billion by 2030, and the pharma sector has maintained its growing pace following the pandemic. The Ayushman Bharat Digital Mission seeks to provide the framework required to sustain the nation’s integrated digital health infrastructure as well. The digitalisation, innovation and Research & Development in the pharma sector will help India maintain its leading role globally.
o To further deepen domestic value addition in manufacture of mobile phones, the Finance Minister announced relief in customs duty on import of certain parts and inputs like camera lens which will benefit mobile phone manufacturers in India.
o The concessional duty on lithium-ion cells for batteries will continue for another year. Basic customs duty on parts of open cells of TV panels has been reduced to 2.5%. The Budget also proposes changes in the basic customs duty to rectify inversion of duty structure and encourage manufacturing of electrical kitchen chimneys.
o Various policies were announced, which will generate demand for a variety of chemicals including construction chemicals, emission control catalyst, polyurethanes, TPUs, bio-pesticides, etc. Further changes in Basic Custom Duty rates of various goods like crude glycerine, denatured ethyl alcohol, acid grade fluorspar, specified chemicals for manufacture of pre-calcined Ferrite Powder, etc would provide impetus to increase domestic demand for these products/ Make in India policy.
· The Finance Minister announced that a capital outlay of Rs 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013- 14.
· The Finance Minister said that last year, she proposed revamping of the credit guarantee scheme for MSMEsand announced happily that the revamped scheme will take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1 per cent.