Geared up for inclusive growth

This year’s Union Budget has quite a few positives for the manufacturing sector.

1. The government’s continued focus on developing infrastructure in roads, railways and freight corridors will provide a good boost to the manufacturing sector.
2. Revamping of the online loan sanctioning facility and the intent to introduce measures to manage non-performing assets (NPAs) and stressed assets for micro, small and medium enterprises (MSMEs) will increase financing and ease the working capital challenges in the MSME segment.
3. The lowering of the corporate tax rate for companies with a turnover up to 250 crore INR will enable higher investible funds in the hands of these companies. This will make small companies more competitive, enable employment generation and give a boost to the manufacturing sector.
4. Permitting companies covered under the Insolvency and Bankruptcy Code, 2016, to carry forward and set off of business losses in case of a change in shareholding and allowing the aggregate amount of unabsorbed depreciation and brought forward losses to be reduced from book profit for Minimum Alternate Tax (MAT) purposes will positively impact valuations and, thus, bid values.
5. Custom duties on some products have been raised, which will positively impact local manufacturing.
6. Promotion of large-scale MSMEs and rural agro-processing will encourage a shift in production activity to tier II and tier III districts. The advent of digital technology is also aiding economies of scale in relatively smaller units, and they are connecting to the market better. We see this as a positive impetus, which will have to be backed by ‘ease of business’ beyond large urban centres. Much like the lower cost of production offered by China and India to Western economies, this spread of industrial production to smaller districts can lower the overall cost for large companies. We are hopeful that this will create a growth engine and also provide benefits and employment to our large and growing population residing in small towns and districts.

Separately, the manufacturing push will be supported by the 30 places jump in the World Bank’s Ease of doing business ranking. As per PwC’s 21st CEO Survey, India has emerged as the fifth most attractive market for investments, reflecting global optimism about Indian economy and its growth prospects.

We would like the government to facilitate labour reforms and also frame laws regarding land acquisition which will benefit all stakeholders. While on-ground execution of government policies and plans will be the key to investment and consumption uptick, we remain optimistic about India’s growth story and, in turn, India’s manufacturing sector.