High cost of finance needs to be addressed: IEEMA

With a target to make India the world’s third largest economy by 2030, the government has its mission set. However, a fine balance needs to be maintained among competing objectives of containing the fiscal deficit and providing necessary stimulus to propel the economy.

Our mission to become a developed country will require quality power to boost the engines of growth.

The newly-appointed Finance Minister Ms Nirmala Sitharaman will deliver her maiden budget on July 5, 2019. The Budget is likely to focus on infrastructure development, tax relief to common man, creation of more jobs, disinvestment and fiscal consolidation.

IEEMA expects from the Hon’ble Minister to announce a series of measures to further accelerate the growth of electrical equipment industry and the power sector as a whole. The industry is facing slowdown in few product segments, due to lack of demand and increasing imports that has touched approx. $10.24 billion in 2018-19.

Harish Agarwal, President, IEEMA said, “It is high time for the Government to increase the competiveness of the domestic electrical equipment industry by reducing the cost of manufacturing through favourable tax structure; quality infrastructure; availability and controlling the landed cost of necessary imported raw materials & components. High cost of finance is another area of concern, especially for the SME segment, with limited funding options, given its appetite for working capital.”

He further recommended, “There should be zero Basic Customs Duty on imports of CRGO Steel and Amorphous Alloy Ribbon, till the time these are produced indigenously. Since neither of these materials are manufactured in India now there is no one to be protected in the form of Basic customs Duty”.

Sunil Misra, Director General, IEEMA opined, “We also recommend for abolition of MAT and reduction in corporate and personal income tax as these steps would help in increasing consumption and in turn promote economic growth. Quick refund mechanism for all embedded taxes and duties in entire value chain under GST is another key to promote sustainable growth of the industry. Finished electrical equipment (largely under Chapter 84 and 85) attract basic customs duty, ranging from 7.5% to 10%, while the same product are also imported at a concessional basic customs duty of 5%, under the Project Imports, bringing in disadvantage and lack of level playing field for the domestic industry. Domestic industry needs to be given equivalent benefits to compete this concessions.”

The electrical equipment industry looks forward to a progressive and pro industry budget, which will further take the economy towards a higher growth trajectory