A strategic and long-term road map that helps recovery is needed
I would like to see the Budget come up with a strategic, long-term plan and outlay that aids year-long recovery and helps improve consumer demand that has collapsed. This could be achieved by multiple means, some of which are already being implemented such as the PLI scheme, lower corporate income tax for new companies etc. However, more needs to be done.
The reduction of GST and applying a uniform GST of 18 percent will lead to better compliances as the tax base improves. To enhance local competitiveness amongst suppliers, tax incentives should be increased for investments made for R&D in new technology areas. Also, bringing petrol and diesel under the purview of GST will help streamline the costs impacted by fuel.
Sector-specific investments have taken a deep plunge ever since the pandemic wreaked havoc. Provision of increase in Remission of Duties and Taxes on Export Products (RoDTEP) and export subsidies will help manufacturers tackle counterfeit, forged products. The RoDTEP is a flagship export promotion scheme that was brought in January 2021 to encourage export activities. However the overall reduction in benefits provided by RoDTEP from earlier plans are hurting the exporters.
To encourage investment in EVs, reduction in GST for e-two wheelers, EV batteries is crucial. Increase in tax sops for EVs and charging units will push sales. Supporting PLI in Battery pack and cell manufacturing is a good step as the battery accounts for over 40% of the cost of the electric vehicle on average.
Investments in semiconductor chip manufacturing, high end electronics controls, rare earth magnets and other critical components for EVS will make India not only self-sufficient in the long term demand within the country but could also make it key source of low cost manufacturing for exports other than China.
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