India Inc on a high; gives FM three cheers

Our Bureau Mumbai | Updated on September 20, 2019 Published on September 20, 2019

Says government’s action demonstrates its conviction to pursue economic reforms

The reduction of corporate tax rate to 25 per cent from 35 per cent (22 per cent from 30 per cent without exemptions) and to 15 per cent for new manufacturing units registering after October 1 with a target to start production before 2023 has boosted corporate sentiment, which was hit by sagging economic growth and fall in demand.

Kumar Mangalam Birla, Chairman, Aditya Birla Group, said the government’s decisive steps to pump-prime the economy will lead to a big reset and revive the animal spirits of corporate India.

The reduction in corporate tax will not only lead to economic buoyancy but will also make Indian industry more competitive globally. Above all, these measures only reaffirm the government’s willingness to move beyond incrementalism and act with conviction to pursue economic reforms, he said.

Some of the sectors that will immediately benefit from the cut in tax are banking, FMCG, consumer durables and auto companies.

Rajnish Kumar, Chairman, SBI, said the large reduction in corporate taxes across the spectrum of all companies is perhaps the boldest reform in the last 28 years.

The move to incentivise setting up of new manufacturing units in India comes at the most opportune time for foreign companies that could be actively looking for opportunities to invest globally, he added.

Gautam Hari Singhania, Chairman and Managing Director, Raymond, said the cut in corporate tax is a fitting response to a slowing economy and weakening consumption while also reviving investment sentiments and accelerating economic growth.

The lower tax rate along with fair and even-handed tax administration will help Indian businesses become more competitive in the global space, he added.

TV Narendran, Managing Director, Tata Steel, said the move addresses the cost of doing business in India but the challenge for the government is to find alternative revenue streams to support the planned infrastructure expenditure. Ajay Piramal, Chairman, Piramal Group, said the government has signalled that it is listening to the industry and willing to embrace it as a partner for progress of the country.

The NBFC sector will save between ₹250-300 crore that can potentially be redeployed as loans, he said.

Sajjan Jindal, Chairman and Managing Director, JSW Group, said a massive ₹1.45 lakh crore savings from the corporate tax rate cut is a timely stimulus for the revival of economy.

Prathap C Reddy, Chairman, Apollo Hospitals Group, said the lower taxes has the potential to make India the manufacturing hub of the world, and in healthcare, it will give a boost to consumables and device manufacturing.

Anil Agarwal, Chairman, Vedanta, said the revised tax rate will pave the way for new investments from start-ups and MSMEs, creating a robust ancillary ecosystem. The journey looks extremely bright for creation of thousands of jobs, helping the country march towards the $5 trillion mark, he added.

Terming it as a big reform, Uday Kotak, Chairman, Kotak Mahindra Group, in a tweet said Indian companies can now compete with lower tax jurisdictions like the US. It signals that the government is committed to economic growth and supports legitimate tax abiding companies.

Vishal Kampani, Managing Director, JM Financial Group, said the decision will kick-start the next big economic upcycle and boost corporate earnings during the current fiscal, which will lead to revival of the consumption story.

The government has already ensured adequate liquidity for NBFCs and housing finance companies to facilitate higher economic expansion leading to higher tax revenue to meet its fiscal targets.

Published on September 20, 2019
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