By Shivangi Acharya and Nikunj Ohri
(Reuters) – Indian Finance Minister Nirmala Sitharaman will present the national budget on Feb. 1, amid slowing growth in Asia’s third largest economy and rising global uncertainties.
Industry is lobbying for steps to boost growth expected to stutter to a four-year low this fiscal year, by putting more money in the hands of the middle class as urban consumption falters. The government is considering some income-tax cuts and incentives for electronics makers, Reuters reported last month.
CONSUMPTION BOOST
The government should cut tax on fuel and reduce income tax for those earning up to 2 million rupees ($23,000), lobby group Confederation of Indian Industry (CII) said.
It should also increase benefits under state-backed schemes such as a rural job guarantee scheme, raise cash handouts to farmers and consider consumption vouchers for lower income groups.
TAX CHANGES
India should further simplify tax rules to ease business, said another lobby group, FICCI.
The government should consider providing relief in capital gains tax on factory sale proceeds invested in bigger units, said Virender Nagpal of small-industry group Laghu Udyog Bharti.
INFRASTRUCTURE SPENDING
India should keep up increased infrastructure spending and raise it by a quarter in the next fiscal year starting from April 1, CII said.
Government infrastructure spending has been key to India’s world-beating economic growth in recent years, though it is likely to undershoot a record spending allocation of 11.1 trillion rupees ($131.72 billion) in fiscal year 2024/2025.
TARIFF CUTS
The government should cut duties on electronic components such as parts of mobile telephones, including parts of printed circuit boards (PCB) and camera modules, to reduce costs for domestic phone assembly units, the Indian Cellular and Electronics Association said.
India is the world’s fourth-largest smart phone supplier with much of its manufacturing progress led by global firms such as Apple and Samsung. India aims to expand its electronics manufacturing to $500 billion by fiscal 2030.
ICEA said India should also cut duties on parts for television makers and car displays, while considering allocating financial support of nearly $4.6 billion to assist domestic electronic component manufacturing.
EXPORT FOCUS
With China largely front-and-centre for Trump’s tariff threats, India may find a “significant opportunity” to boost exports by $25 billion in sectors such as electronics, automobiles, chemicals and textiles, said Ashwani Kumar, head of the Federation of Indian Export Organisations’ (FIEO).
To exploit the situation India should consider a new marketing scheme focused on exports to the Unied States, FIEO said in a statement.
India should wean itself of reliance on foreign shippers by investing further in its own shipping corporation or encourage a private sector shipping line, the body added.
($1=86.5690 rupees)
(Additional reporting by Manoj Kumar in New Delhi, Munsif Vengattil in Bengaluru; Editing by Clarence Fernandez)
