India’s economy is currently the fastest-growing in the world, with average annual growth rates of 5.5% during the last ten years. Three megatrends global offshore, digitalization, and the energy revolution are currently enabling the more than 1 billion-person country to experience previously unheard-of economic growth.
Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2023-24 on February 1. With a focus on Capex, manufacturing, infrastructure, and the rural economy, the budget for this year is anticipated to be growth-oriented. After the pandemic’s effects, it is anticipated that the Union Budget will put the economy on an accelerated growth path. As preparations for the budget announcement get underway, the government has prioritized making changes to the tax code to promote sustainable growth, investing in infrastructure, focusing on R&D, fostering incentives for the core sectors, such as manufacturing and services, and utilizing the vast experience of operating captive centers.
- Schemes and rebates to rebuild this sector: Currently, India has the fourth-largest retail market in the world and is expected to reach $ 2 trillion by 2032 from $ 0.69 trillion in 2021. Therefore, we expect the government to implement the National Retail Trade Policy in order to streamline the growth of all formats of retail trade and reduce compliance and regulatory burden. Similarly, GST on the same should also be reduced to provide relief and relaxation on the current inflated economy and increase the price of raw materials.
- Promote manufacturing: The Union Budget 2023 is also expected to introduce reforms such as Production Linked Incentive (PLI) Scheme. This will also showcase the government’s intent to promote a healthy backward integration and provide impetus to domestic manufacturing, elevating India’s position as a global manufacturing hub.
- Reduction in GST for consumer durables: As the budget for fiscal 2023–24 draws near, the retail sector anticipates the government to introduce reduced GST for consumer durables and lower compliance costs, which will benefit both the industry and consumers. We also expect a lowering of the tax slab to 18% from 28% which would help in offset price pressure along with the demand for both AC(Split and Window) and television (above 105 cm). Additionally, the retail industry anticipates the introduction of a National Retail Policy, which would involve supporting new technologies and quick infrastructural assistance to facilitate modernization and digitization.
- Electronic companies expect Central Government to reduce tariffs: In this budget, we would expect lower import taxes on components used to make open-cell panels for a television production. An essential component of LCD panels, which are used to produce TVs, are open cells. In India, open-cell components are now subject to a baseline customs charge of 5%. We think that the Indian Government should consider and reduce these customs charges to 0%. This will benefit promoting domestic manufacturing and keeping the prices competitive.
(The author is Ms Pallavi Singh Marwah, VP at SPPL(Super Plastronic Pvt. Ltd.) and the views expressed in this article are her own)
