(MENAFN- KNN India)
New Delhi, Nov 25 (KNN) As preparations for India's Union Budget for FY26 begin, the government has initiated internal discussions to boost the country's manufacturing sector.
Key to these deliberations is the introduction of a new set of incentives designed to stimulate employment generation and fresh investments across the sector, according to sources familiar with the matter.
While the government has already rolled out production-linked incentives (PLIs) in a number of sectors, the proposed scheme under consideration aims to broaden the scope by linking government assistance to both capital expenditure and job creation.
This shift is seen as crucial to achieving the government's long-standing goal of increasing manufacturing's contribution to India's GDP, which has remained stagnant at around 16 per cent since FY12, despite efforts to push the sector's share to 25 per cent.
An official involved in the discussions stated that the upcoming measures may focus less on production-linked schemes and more on incentives tied to capital investment and employment growth. However, these discussions are still in their early stages, and specific details are yet to be finalized.
In recent months, the government has been urging Indian industry to expand its capacity, leveraging existing policies such as PLIs, employment promotion schemes, and corporate tax cuts introduced in 2019.
While the corporate tax reduction has been significant-slashing rates for existing firms to 22 per cent and for new manufacturers to 15 per cent-the expected surge in corporate investment has been slower than anticipated, with tax revenue growth not keeping pace.
A push for investment is especially pressing given the slowdown in corporate tax revenue growth and the government's efforts to make up for lost revenue, which exceeded Rs 1 trillion in 2020-21 due to the tax cuts.
“Industry is now telling us that to step up investment, the government has to extend more incentives,” said another official.
In addition to the PLIs launched in 2021 across 14 sectors, which have produced mixed results, the government is expected to announce further schemes as part of a broader strategy to boost manufacturing and employment in the coming years.
(KNN Bureau)
MENAFN25112024000155011030ID1108923934
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.