Finance Minister Arun Jaitley mentioned "industrialized" 16 times in his Budget speech, enough to get smiles on the face of most manufacturers. From hi-tech chip companies, who need to invest billions in production units, to the small and medium company who invests Rs 25 crore, there was incredible for everybody.
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The Budget clearly made a case for more family mechanized by doing away with the upturned duty organization for many products that made domestic manufacturing uncompetitive. Importing a finished IT hardware product, for instance, was more profitable than manufacturing and selling it in India because of common duties on electronic components used.
Jaitley now has corrected the incongruity. He has exempted all inputs and machinery used in the manufacture of personal computers from the four per cent special additional duty (SAD). He has also exempted SAD on PVC sheet and ribbon used for the manufacture of smart cards and on parts and raw equipment obligatory for the manufacture of wind-operated generators. Furthermore, the FM has imposed education cess on imported electronic products - that would bring equality between nationally affected products and imported ones.
"While it would improve familial modern of IT hardware, the only displeasure is that the SAD immunity has not been complete to all electronic products," Sunil Vachani, Chairman and Managing Director of Dixon, an electronic manufacturing service supplier, said.
Vachani, however, will be happy with another declaration in the budget that seeks to give confidence more family construction of old cohort television such as cathode ray TVs, which still has a big market in India. Jaitley has exempted colour picture tubes from basic customs duty to make cathode ray TVs cheaper. The duty dispensation may help perk up manufacturing of such TVs. The FM has also done away the basic customs duty on LCD and LED TV panels of below 19 inches from 10 per cent to zero to encourage domestic production.
"We will see investments coming into the television sector in the next six months," Vachani hoped.
BUDGET SPEECH: Full text | Video
An important increase to familial modern could also come from asset-linked allowances. Last year's budget laid out an speculation grant for any manufacturing company that invested more than Rs 100 crore in plant and machinery. Jaitley has now complete similar benefits to small and medium manufacturers. He has provided investment allowance at the rate of 15 per cent to a manufacturing company that invests more than Rs 25 crore in a new plant and apparatus. The benefit will be accessible for savings up to March 2017.
What is, perhaps, more heartening is the holistic move toward noticeable in the budget. It is not just about exemptions like SAD meant for core manufacturing companies. According to Ashok Chandak, Chairman of India Electronics and Semiconductor Association, the FM's announcements point to hopeful what he calls "design-led manufacturing". India may not be talented to compete with China when it comes to low-value, high volume manufacturing, but it can be ready for action when it comes to high value products, which slip in a lot of design and software. Jaitley's proposal to institute a Rs 10,000 crore fund to give risk capital for start-ups is an indirect positive for the modern sector.
There are two other enablers to manufacturing - road and rail network and skills. Changes in the Apprenticeship Act, implicit in the budget, as well as communications projects such as 'smart cities', may have a long-term impact on growing the country's manufacturing sector.