The Union Budget 2023, presented by Finance Minister Nirmala Sitharaman, reflects a pro-growth agenda with significant investments in infrastructure, green initiatives, and technology-driven projects. 

The budget places a strong emphasis on the "Make in India" and "Aatmanirbhar Bharat" programs, aimed at boosting the manufacturing sector.

The latest budget, announced on February 1st, is a major win for taxpayers, job creation, and capital expenditures. This is the fifth budget of Modi 2.0 and the last full budget before the upcoming general election in 2024. During the budget session, Sitharaman stated that the Indian economy is on the right track and headed towards a prosperous future. She referred to this year's budget as the "first budget of the Amrit Kaal."

The Union Budget 2023, presented by Union Finance Minister Nirmala Sitharaman, is being touted as a pro-growth budget with a focus on infrastructure, green growth, and tech-enabled projects, aimed at boosting the manufacturing and auto sectors. In light of India's projected economic growth forecast of 6-6.8% for FY 2023-24, as indicated by the Economic Survey, the government has allocated a substantial capital outlay towards its "Make in India" and "Aatmanirbhar Bharat" programs.

Tax slab changes have been introduced under the new tax regime, with a 33% increase in capital spending to INR 10 trillion ($122 Billion) to expand the country's road, port, and airport networks, making it an attractive destination for investors.

Initiatives like the PLI scheme for Advanced Chemistry Cell (ACC), PLI scheme for the automotive sector, and Faster Adoption of Manufacturing of Electric Vehicles (FAME) have already been launched to promote the shift towards cleaner and more efficient alternative fuel technology in the automotive sector.

The budget has also allocated INR 19,700 crores for the National Green Hydrogen Mission, aimed at reducing India's dependence on fossil fuel imports and promoting green mobility. Customs duty has been exempt on capital goods imported for the manufacturing of lithium-ion batteries, encouraging domestic production of EVs and providing a boost to the EV sector and the automotive industry as a whole.

Toy manufacturing

The Indian Government has made a push to develop the country's toy manufacturing industry and reduce the importation of unsafe toys, primarily from China. The decline in toy imports by India, as reported by the Commerce Ministry, has decreased by 70%, indicating a reduced reliance on foreign-made toys. In support of this effort, the Government has introduced a program that offers a PLI scheme worth Rs 3,500 crores to incentivize manufacturers to produce toys that meet Bureau of Indian Standards (BIS) standards. Additionally, the Union Finance Minister has announced an increase in customs duties on toys and toy parts from 60% to 70% in an effort to discourage imports and encourage domestic production.

Other measures

The Union Budget 2023 has brought about exciting new prospects for manufacturing in India with a series of incentives for the sector. The finance minister has announced the extension of a 15% corporate tax rate to new manufacturing co-operative societies formed until March 31st, 2024. This is a significant boost for co-operatives in industries such as sugar and ethanol production, food products, etc. In addition, the carry forward and offset of losses for start-ups has been extended from 7 years to 10 years. The eligibility period for new start-ups seeking exemption has also been extended by one year, until March 31st, 2024.

Ease of doing business

The 2023 Budget presented by the FM has a focus on simplifying the process of doing business in India. In order to achieve this, several new initiatives have been introduced, including a "common identifier" system for PAN (Permanent Account Number) of establishments and a unified filing process for submission of information to government agencies. Additionally, the government is setting up a central data processing center to facilitate faster handling of administrative work under the Companies Act.

While the budget did not provide incentives for research and development and GST tribunals, it is considered a positive step towards establishing India as a leading manufacturing hub in the world. The focus on 'Make in India' and a shift in India's energy mix, along with measures aimed at easing the process of doing business, are expected to lead to sustained economic growth and provide a boost to the manufacturing sector.

Conclusion:

The Union Budget 2023, presented by Finance Minister Nirmala Sitharaman, aims to spur growth in the Indian economy by investing in infrastructure, green growth, and tech-enabled projects. The budget lays emphasis on "Make in India" and "Aatmanirbhar Bharat" programs, offering substantial budget allocations for national green hydrogen mission and EV sector, hiking customs duty on toys, and incentivizing new manufacturing co-operative societies and start-ups. The budget also introduces measures to increase ease of doing business, such as a common identifier for government agencies and a unified filing process for submission of information.

Key Points:

  1. Pro-growth agenda with capital outlay in infrastructure, green growth, and tech-enabled projects.
  2. Boost to manufacturing, auto, and EV sectors.
  3. Increase in capital spending by 33% to 10 trillion rupees ($122 Billion) for expansion of roads, ports, and airports.
  4. Allocation of Rs 19,700 crores for the National Green Hydrogen Mission.
  5. Extension of 15% corporate tax rate to new manufacturing co-operative societies.
  6. Increase in carry forward and set off of losses for startups to 10 years.
  7. Introduction of measures to increase ease of doing business, such as a common identifier and unified filing process.

Although the budget falls short in offering incentives for research and development and GST tribunals, it seems to be a step in the right direction for making India a manufacturing powerhouse in the world. With global economic uncertainties, India is poised to outshine other countries with this budget and further encourage "Make in India."