India welcomes high-skilled electronics manufacturing: FM

Diksha Munjal Mumbai | Updated on February 11, 2020

The the Centre has planned a very large canvas for electronics manufacturing, Finance Minister Nirmala Sitharaman said at a recent post-Budget meet here with industrialists, scholars and journalists.

Responding to a query from BusinessLine, she said: “We are supportive of companies starting high-skilled component manufacturing in the country.”

Currently, while companies conduct large-scale manufacturing of smartphones and electronic devices in the country, most of it is assembly-oriented, and not focussed on core components and R&D. The Budget has proposed a new scheme to promote the manufacturing of smartphones, electronic devices and semiconductors.

However, the implementation of the scheme will hinge on how companies are incentivised to begin manufacturing in the country.

Tax worries

Industrialists and economists voiced their concerns about the Budget to Sitharaman and the panel of secretaries. Expressing the worries of high networth individuals over the burden of dividend distribution tax shifting to investors, Motilal Oswal, MD of Motilal Oswal Financial Services, said ‘high-level’ shareholders could pay tax at the rate of 43 per cent under the new regime, which was worrisome.

On requests related to incentivising long-term investments by reassessing the long-term capital gains (LTCG) tax, which was introduced in 2018, the Finance Minister said: “I have not had a reasonable amount of time and enough data to assess the impact of LTCG tax and I’m being told to withdraw it. Let’s have at least one year of a normal response to a tax and not an extreme one.”

There was a buzz among the event participants on the Finance Ministry taking steps to spur demand and consumption in order to kickstart the economy. “Every move and motive of this Budget was thoroughly discussed so that it gives consumer demand a thrust,” said Sitharaman.

(The writer is interning with BusinessLine’s Mumbai Bureau)

Published on February 11, 2020

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