Finance Minister Nirmala Sitharaman is expected to unveil plans to boost economic growth when she presents the 2021/2022 federal budget on February 1. Corporates and industry lobby groups expect the government to announce greater spending on healthcare and infrastructure, as well as tax breaks for the automotive, manufacturing and tourism industries, reeling from the coronavirus crisis.
Here is a wishlist from industry leaders:
Healthcare and Pharmaceuticals
The drugs industry is hoping for incentives to spur more investment in research and development (R&D), via bigger tax deductions on R&D spending, said Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance.
Kiran Mazumdar Shaw, chief of Biocon Ltd, hopes the government will raise healthcare spending to 2.5% of gross domestic product by fiscal 2025 from about 1% now.
Real estate and Infrastrasture
The real estate and construction sector, a bellwether for the Indian economy, is hoping for tax reliefs for home buyers and regulations curbing a rise in construction costs.
The automobile industry hopes for a roadmap for a recently announced production-linked incentive scheme and policy on scrapping of commercial vehicles.
Toyota Kirloskar, the Indian unit of Toyota Motor Corp, said it was looking forward to support measures for the manufacture of hybrid electric vehicles and parts.
The aviation industry is looking for lower taxes on aviation turbine fuel and levies such as airport charges, parking and landing and navigation charges, said Moody’s India unit, ICRA.
Tourism and Hospitality
The National Restaurant Association of India is hoping for more liquidity support, with low collateral, and a minimum moratorium of six months.
Personal tax breaks for domestic travel would also help, said Deep Kalra, founder and top official of online booking website MakeMyTrip Ltd.
Brick-and-mortar retail firms seek a national retail policy, to help combat the growing popularity of online sellers.
“Formulation of national retail policy, removing the distinction between e-commerce and physical retail under one policy has been spoken about and we hope that this happens in FY 21,” said Preet Dhupar, chief financial officer of Ikea India.
The coronavirus brought a slump in lending by banks, and despite signs the economy is improving, the central bank has warned that the industry could see bad loans nearly double.
Some analysts expect the setting up of a so-called “bad bank”, which the government will use to buy bad assets from state-owned banks. There are also expectations for moves to recapitalise state-owned banks.
Public sector banks may need a further 430 billion rupees ($5.9 billion) as capital requirement in the next financial year, ICRA said.
($1=73.1600 Indian rupees)
(Additional reporting by Sachin Ravikumar, Chandini Monnappa, Chris Thomas, Nivedita Bhattacharjee and Anuron Kumar Mitra in Bengaluru; Aditi Shah and Manoj Kumar in New Delhi, Nupur Anand in Mumbai; Editing by Clarence Fernandez)