A robust manufacturing sector could be a game-changer for the economy. But much needs to be done for that to happen.
(Image for Representation)
The Journey So Far
Budget 2019 incentivised multinationals to set up mega-manufacturing plants in sunrise and advanced technology areas via a transparent, competitive bidding process
Pending GST refunds due to MSMEs shall be paid within 30 days. In the future, GST refunds to happen within 60 days from the date of application.
To make India a global manufacturing hub for electric vehicles (EVs), GST on EVs has been reduced from 12 per cent to 5. Tax on charging stations has also been cut, from 18 per cent to 5. An income tax deduction of Rs 1.5 lakh has also been allowed on interest paid on loans taken to buy EVs. This amounts to a total benefit of around Rs 2.5 lakh over the loan period for buyers.
Is It Enough?
Many central governments have talked about boosting manufacturing, but its share of India’s GDP remains low, at 18.2 per cent in fiscal 2018-19. Growth in manufacturing is also critical to generating jobs, essential in the current context.
The Unfinished Agenda
Improve ease of doing business, especially in land acquisition/ clearances
Encourage public-private partnerships in skill development
Promote industrial clusters that can lower the cost of production
MSMEs supply chains need to be improved. Better rail, road and telecom connectivity is required.