Budget 2023: Boosting India's manufacturing sector - Experts shed light

The government has implemented a number of supply-side policies in recent years to boost manufacturing. As a result of this, India has emerged as one of the favourite destinations for investments from both within and outside. The government has enacted a variety of strategies to endorse the manufacturing industry. The pandemic had a detrimental effect on manufacturing industrial growth; however, the industry recorded double-digit strong growth in the previous financial year 2021-2022.

To mention a few, the implementation of the Goods and Services Tax, a reduction in corporate tax, advancements to the corporate environment and modifications to the FDI policy have benefited the economy.

Profit taxation on new manufacturing units is currently as minimal as 17 per cent. Even so, in the shortage of adequate demand, supply-side policies are proving relatively ineffective. Clearly, measures to increase demand, particularly for discretionary products and services, are required.

Since the government has confined financial capacity to just go completely off the rails with spending, it intends to give established production-linked incentive (PLI) schemes a significant allocation uplift. Such schemes were announced in order to preserve Prime Minister Narendra Modi's vision of it becoming 'Atmanirbhar'. These schemes have the potential to generate substantial output, economic expansion, export earnings, and substantial employment opportunities in the coming 5 to 10 years and even beyond.

According to the experts, the Budget 2023-24 may benefit the sector significantly as the government intends to provide a significant boost to manufacturing while focusing on increasing private investment and exports.

“The Indian manufacturing sector anticipates to promote R&D and provide incentives for the local manufacturers. Adding to that, companies in the manufacturing space should be rewarded for bringing up new technologies and adopting sustainable business practices. With pandemic crises affecting the supply and demand both, the manufacturing industry seeks support from the government,” Ridhima Kansal, director, Rosemoore, said.

According to Siddharth Maurya, Resource Specialist, Expertise - Fund Management, the Budget will be critical for the re-emergence of the manufacturing industry, which is currently rehabbing from the pandemic's impact. 

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"We believe the budget identifies some really vital austerity policies like reinstatement of 'Investment Allowance'. The machine tool sector strives for an amalgamation of policy proposals, concessions and specific schemes to resuscitate growth,” Maurya said.

Ashish Aggarwal, Director, Indo Innovation, said that manufacturing financing should be urged within and between technology companies to bring self-reliant remedies to the nation and the creation of cutting-edge production skill sets from across top and bottom of the hierarchy must be empowered. 

"The advancement of cutting-edge manufacturing skills at the top and bottom of the hierarchy must be illustrated, as this could be a huge success for future skills training,” he said.

More PLI schemes for various industry segments will boost Make in India. There is a buzz that the government could announce PLI in six more sectors in the Budget as the thrust remains on building manufacturing sector and making India an export hub.

Hemant Sapra, President Sales & Marketing, KARAM Group said that increased spending on infrastructure projects by the government so as to improve the business and personal environment which will also lead to boosting the economy.

Raghunandan Saraf, founder and CEO of Saraf Furniture, said that the government should emphasize policies that support infrastructure, the manufacturing industry and clean energy, thereby enabling the nation to start realising its global potential. 

"The budget is expected to keep and offer the best policies and government budget framework to guarantee the nation's economic growth, as well as a budget layout that really can stick up to growth rate of GDP expectations,” he said.

Sanjay Mehta, president, Material Recycling Association of India, said that the removal of basic custom import duties and taxes along with policy measures are required to boost the growth of the industry. 

"Removal of basic customs duty on metal scrap will provide a big boost to the MSME units of recycling industry. The move will also benefit other industries in the MSME sector that uses metal for finished products in various downstream applications such as infrastructure and auto components. The recycling industry plays an important role in the overall growth of the country," Sanjay added.

Building a more sustainable economy will help to reduce the greenhouse gas emissions that cause climate change, Sanjay said, adding that the government will hopefully continue with the existing zero percent duty on ferrous scrap import till "we generate a sufficient quantity and quality of scrap from the domestic market. This will help to create a level-playing field for Indian Recycling Industry in the global arena".