Budget Analysis: 2022 Manufacturing Industry Outlook

Like every other year, 1st of February was an awaited date by everyone, especially by the people in the manufacturing industry. Nirmala Sitharaman, Finance Minister of India, released the Budget 2022 on this date.

This budget comes in a time when two years have gone by since the lockdown. The manufacturing industry faced blow after blow in these two years and was completely thrown off the track. The proposals made by the Finance Minister in this budget successfully lays out a roadmap for the complete economic revival of India. These proposals have been structured in a way that they keep the damage caused during the lockdown and that COVID-19 still exists in mind.

This year the manufacturing industry is looking and hoping for direct fiscal support from the government. Loan guarantees will not be enough if the Finance Minister plans to fulfill the plans she has for the manufacturing industry. Her objective is to steer the share of manufacturing in GDP to 25% GDP growth from the current 17%. If this has to be done, the government will have to focus on providing complete assistance to the manufacturing sector as it is one of the main contributors to GDP in India. Let us now see some of the major highlights from the budget that directly affects the Manufacturing Industry.

Highlights from Budget 2022 for Manufacturing Industry

1. Reduction in custom import duty: Finance Minister proposed reduced custom duty on certain chemicals, including methanol to promote domestic manufacturing. Some diamonds and gemstones will also have a 5% reduction in their custom duty.
2. PM Gati Shakti, Inclusive Development: Another priority was given to government schemes such as PM Gati Shakti. The idea behind these schemes and their promotion is to promote inclusive and clean development and sources of energy that would be considerate of the ecological balance. These schemes were promoted keeping climate change in mind as well as demand creativity from the manufacturing sector.
3. Corporate tax: This is an extension to the previous concessional corporate tax. It provides lower tax rate to newly made manufacturing companies. This is done with the focus to incentivize business creatives to build more and more manufacturing corporations and take in more private investment.
4. Digitization of Manufacturing: The budget also emphasizes the need of increasing digitization in the market. Proposes to the manufacturing sector to shift their business online and run an E-portal where people can easily access their services. This would mean everything related to manufacturing wouldn’t be happening in shady offices but through online discussions and transactions.
5. Large scale employment opportunities: The issue of unemployment was at the core of Budget 2022 and the responsibility as well as the resources to create large-scale employment opportunities were trusted into the hands of manufacturing industries. This will be a two-way boost, one for the manufacturing industry and another for providing appropriate large-scale employment.

Also Read:- Hike In Price of Raw Materials Procurement in Construction Industry

These are some of the major highlights from the budget 2022. The outlook of manufacturing industries at this point should be to use as much government support as possible and take advantage of the safe environment being built by the government for GDP growth and work on these lines to build their businesses and eventually become large-scale manufacturers.