Manufacturing sector misses booster dose as ’Make in India’ gets lip service

Finance Minister Arun Jaitley reiterated the government's aim to make India a manufacturing hub but kept industry watchers waiting for concrete moves to incentivise local production and primarily toyed with cutting duties on raw materials and minor tinkering with excise duty, which is unlikely to make a big difference to the sector.

The basic customs duty on certain inputs, raw materials, intermediates and components in 22 items is proposed to be reduced to minimise the impact of duty evasion.

The FM also proposed all goods except populated printed circuit boards for use in manufacture of ITA bound items to be exempted from special additional duty.

With a view to facilitating generation of employment, he proposed to amend the provisions of section 80JJAA of the Income-tax Act which currently provides tax benefit to a ‘person’ deriving profits from manufacture of goods in a factory and paying wages to new regular workmen. The eligibility threshold of minimum 100 workmen is proposed to be reduced to 50.

Further, additional depreciation at 20 per cent is allowed on new plant and machinery installed by a manufacturing unit or a unit engaged in generation and distribution of power. However, if the asset is installed after September 30 of the previous year only 10 per cent of the additional depreciation is presently allowed. It is now proposed to allow the remaining 10 per cent of the additional depreciation in the subsequent previous year.

Additionally, Jaitley also gave state specific sops for manufacturers by providing an extra investment allowance of 15 per cent and another depreciation allowance of 15 per cent to new manufacturing units set up in notified areas of Andhra Pradesh and Telangana for next five years from April 2015 to March 2020.

Bimal Tanna, partner and leader, industrial products at PwC India, said, “While some of the steps taken by the FM will certainly help in attracting investors and ease doing business in India, we would have wanted more from the FM given the spotlight on 'Make in India’ like reduction in the MAT rate for the manufacturing sector.”

(Edited by Joby Puthuparampil Johnson)

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