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Finance Minsitry working on sops for manufacturing sector

Saturday, 5 July 2014 - 7:30am IST | Place: New Delhi | Agency: dna

The North Block is likely to announce measures to revive the manufacturing sector in the upcoming budget.

A roadmap for the review of the Foreign Trade Agreements (FTAs), re-energising special economic zones (SEZs) is on the cards, according to ministry officials. Ship-building, defence and aircraft component manufacturing are also likely to get a mega push.

A senior official told dna, "There is a huge concern in the government about the FTAs and the SEZs and there is a strong likelihood that the some aspects of both these will be addressed. Certain tax related issues for the SEZs are on cards. Labour intensive manufacturing is a priority."

The government is also looking to give fillip to consumer durables sector like the automobile sector, which has been given duty cut extension for six more months.

The finance ministry may also ask banks and financial institutions to aggressively pursue the demand of the consumer loans.

"The idea is that if the government could incentivise the purchase of the consumer durables and reenergize the demand of such products, a host of the industries that supply to such manufacturers will benefit."
While the Index of Industrial Production (IIP) growth has shown a lacklustre show in the last couple of years, the inconsistencies in the policy environment has also taken a toll.

"When the SEZ policy came about, a lot of foreign investment was attracted based on certain tax benefits. The financial projections derived from such tax benefits made a case for SEZ development. However, later with the withdrawal of tax benefits (MAT and DDT were imposed), the SEZ space is not so attractive for companies wanting to put up units, said Ramesh Mysore, governing council member, Global Initiative for Restructuring Environment and Management (GIREM).

Industry also demands a thrust on power and inland waterways.

"The focus areas which are supposedly to be in the agenda should concern with building infrastructure in the country like inland waterways. Since India is reeling under high power cost, the government needs to focus and address this by having higher generation of power plants across the country which will serve the purpose and stand in good stead," said R H Jalan, MD, GHCL Ltd.
 




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