Santosh Dalvi, Partner and Deputy Head of Indirect Tax, KPMG in India
The Budget 2023-24 continued its journey of Amrit Kaal, with focus on green growth, commitment to laid leitmotifs like ‘Make in India’, ‘Atmanirbhar Bharat’ and ‘Digital India’ and fiscal prudence.
The Budget proposed alignments on duties applicable to imports to support the “Make in India” and ‘Atmanirbhar Bharat’ initiatives like customs duty relaxations on camera lens, parts of camera modules, parts for manufacture of open cell of TV panel and some others. It has also prioritized green growth by extending customs duty exemptions on capital goods used in manufacturing of lithium-ion cells for batteries used in electric vehicles and denatured ethyl alcohol.
To plug loopholes in policies advocating manufacturing of solar modules and cells in India, exclusion of solar power projects has been proposed in the ‘Project Import Regulations’.
Certain amendments like restriction of input tax credit on CSR expenditure and increased tax base for online information and database access or retrieval services could entail higher tax costs for businesses and augmented revenues for the Government.
No announcements for amnesty schemes under Customs or erstwhile laws was disheartening for the larger industry, who were eagerly looking forward to settlement of long pending disputes.
Overall, the Union Budget 2023-24 aims to capitalize on India’s resources and maintain a balance between fiscal prudence and Indian growth amid global uncertainties.
INFRASTRUCTURE / ENERGY
Elias George, Partner and National Head, Government and Public Services, KPMG in India
Out of the seven ‘Saptarishi’ Budget priorities, the enhanced outlay and focus on infrastructure stands out – at INR 10 trillion, which is an increase of 33 per cent. Amongst the infrastructural sectors, transport infrastructure for servicing, production and manufacture is a key focus area, apart from railways and air traffic. Leveraging infrastructure for small cities through the Urban Infrastructure Development Fund (UIDF) is expected to impart greater vibrancy to India’s tier-2 and tier-3 cities. All told, this booster shot for infrastructure will hopefully have a three-fold impact: acting as a pump-primer for enhancing GDP growth, serving as a catalyst for crowding-in greater private sector investment into the urban and infrastructure domains, and accelerating the pace of employment creation.
Another initiative that stands out is the thrust on green growth, which fortifies India’s leadership position and commitments towards reducing adverse climate impacts. The Green Hydrogen Mission’s INR 35,000 cr investment for energy transition, and the proposed viability gap funding to incentivise private sector investment in battery energy storage systems, incentives announced for farmers to adopt natural farming and to use natural fertilisers, are all measures that will further national objectives towards a greener economy.
These two key initiatives along with the announced financial sector reforms and measures to improve the ease of doing business are expected to be game-changers for promoting India’s aspiration of sustainable, inclusive, and green growth.