After the United States of America passed a bill to bring down corporate taxes with an overwhelming support from Republicans, leaders of India’s electronics and IT industry believe that the finance ministry should provide them with similar tax incentives in order to boost domestic manufacturing of electronics and IT goods.
Finance Minister Arun Jaitley, in conversation with leaders of India’s electronics and IT sector during the 6th Pre-Budget session, said that the current NDA government has taken several steps over the last 3 years to promote indigenous manufacturing of electronics. These steps include rationalization of the tariff structure with the extension of differential excise duty dispensation on specified electronic equipment and withdrawal of duty exemption.
Industry leaders also pointed out that the forthcoming budget for the fiscal year 2018-19 should increase social security pension and impose long-term capital gains. The IT industry also sought the government to help in combating visa issues faced by several software professionals.
“The amount (for social security pension) has been 200 per month. This is totally unacceptable. There is no reason to keep it so low. So, make it at least 500, I would say even 1,000, if possible and increase the coverage,” said Jean Dreze of the Delhi School of Economics after the meeting with the Finance Minister.
Boosting domestic manufacturing of electronic goods was one of the key agendas of the NDA government. India is one of the biggest consumers of electronic goods, but even today, only a handful of them are manufactured domestically. The government, then, should seek to rationalise taxes for the electronics and IT industry, especially, the corporate tax.
By lowering down corporate taxes, India can exponentially increase manufacturing of electronics goods. As manufacturing processes increase, more factories will be set up in the countryside. And an increase in the number of manufacturing plants in rural India, more jobs will be created. It then seems that the government can solve a myriad of problems if it listens to the pleas of the electronics and IT industry.