Union Minister Ravi Shankar Prasad on Friday exuded confidence that tax measures by the government will accelerate fresh investments to boost electronics, including components, manufacturing in India, and asked firms to take advantage of "huge financial incentives".
The tax relief for manufacturers, which works out to nearly 50 per cent, now positions India attractively against other markets, the minister asserted.
The move comes at a time when India is hard-selling itself as a global electronics production hub to wrest market share from manufacturing powerhouses like China, Vietnam and Thailand.
India's attempts to woo investors, including Apple, also coincides with rising trade tensions between the US and China, a global manufacturing destination. Sources said the latest tax-related sweetners by India, now positions it favourably viz-a-viz rival countries, including China.
Speaking to reporters here, Prasad said he has instructed his department to initiate follow-up action to take full advantage of Friday's tax announcement, and added that he had already reached out to captains of the industry to inform them about the incentives being given out.
"Now, there is a robust investor-friendly taxation regime and duty regime has also been properly restructured...We want India to be a big hub for electronics manufacturing. Besides mobile and consumer electronics, we want India to be a major hub for telecom equipment manufacturing," said Prasad, who is the Minister for Electronics and IT, as well as telecom.
Prasad - who has been aggressively pushing electronics and mobile manufacturing in the country and met industry leaders earlier this week to pitch India as a global production hub - urged the telecom equipment manufactuers and other players to avail benefit of tax sops.
"Now, India's tax regime is as exciting as many of the other countries. Almost 50 per cent down...It is a booster for Make in India initiative," Prasad said without naming other rival markets.
India has set its sight on creating a USD 400 billion (around Rs 28.43 lakh crore) electronic manufacturing ecosystem by 2025, and notified a new policy to galvanise such activities.
The National Electronics Policy 2019 - cleared by the Cabinet earlier this year - plans to bolster mobile manufacturing in the country to 1 billion units worth USD 190 billion (about Rs 13 lakh crore) by 2025, of which 600 million units worth USD 110 billion (about Rs 7 lakh crore) will be exported.
"I have asked my Department to focus particularly on component manufacturing. And the component manufacturing companies will also be covered under these incentives," he said.
The government has slashed the tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate of 17.01 per cent for new manufacturing firms in a bid to bolster economic growth rate from a six-year low by incentivising investments to help create jobs.
Earlier in the day, Finance Minister Nirmala Sitharaman announced that to attract fresh investment in manufacturing and boost Make In India, new provision has been inserted in the I-T Act, which allows any new domestic company incorporated on or after October 1, 2019, making fresh investment in manufacturing, and starting operations before March 31, 2023, an option to pay income tax at 15 per cent.
The effective rate for new companies will come to 17.01 per cent after considering surcharges and cess subject to the condition that they do not avail any other tax incentive or concession such as tax holidays enjoyed by units in special economic zones (SEZ) or accelerated depreciation.
This compares to the current base rate of 25 per cent for new companies and an effective tax rate of 29.12 per cent.
"India offers a stable Government, strong talent pool, investor-friendly policies and a huge market. We are going to promote exports in a big way," Prasad said.
It may be recalled that during CEOs roundtable held on September 16, the minister had nudged iPhone maker Apple to expand manufacturing base in India, and use the country as export hub, and had promised fresh sops to galvanise electronics as well as phone industry in coming 2-3 months.
Prasad also sought to downplay concerns over job losses saying that data showed that employment opportunities had been created in the IT and electronics industries.
"People are getting jobs in infrastructure development including construction of roads. India has jobs, and the opportunities will increase. We should talk about concrete data and not wishful campaign," the minister said.
The fundamentals of Indian economy is strong, he added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)