Consider reduction in corporate tax to 15% for defence SMEs: Puneet Kaura

Tax incentives for private sector at par with PSUs should be offered to boost defence indigenisation

Puneet Kaura, MD and CEO, Samtel Avionics

Last Updated : Jan 20 2017 | 3:32 PM IST

Allocation for defence should be increased by 100 basis points; the allocation has been stagnant at 2.6 percent of GDP for last few years. The immediate need to increase the budget allocation is to meet advanced technology, infrastructure, toward support and personnel equipment needs of defence forces in line with global competition.

In addition to increased allocation, the government should address the lack of integrated planning for procurement amongst armed forces in the budget. The Finance Ministry should form a committee to bridge the gap between different government departments to fast track allocation of defence orders. The committee can comprise of industry, Government representatives and strategic partners to be announced by the MoD. This will help Government to solve our current predicament and achieve its Make in India dream in Defence.

Since the Government focuses on indigenisation in defence, the defence SMEs should be considered for reduction in corporate tax to 15 percent. SMEs should be asked to submit yearly report towards their contribution to Defence manufacturing in lieu of the tax incentives. Also, additional incentive for defence R & D for SMEs should be announced.

The Government should consider offering tax incentives for private sector at par with PSUs in defence for a ten year period to boost defence indigenisation.
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Puneet Kaura is the managing director & CEO of Samtel Avionics