India unveils its budget on July 23 in the first major policy announcement of Prime Minister Narendra Modi’s third five-year term, which could usher in changes to economic priorities.
Finance Minister Nirmala Sitharaman is considering some cuts to personal tax rates while sticking to the year’s fiscal deficit target, government sources have said.
Here are industry’s key demands for the budget:
CONSUMPTION BOOST
The government should consider tax cuts in India’s lower income brackets to leave more money in people’s hands and support consumption, the Confederation of Indian Industry (CII) lobby group said.
While the economy grew at a world-beating 8.2% in the financial year 2023-24, consumption has grown at half that pace. CII urged the government to offer a higher wage in its only rural job guarantee scheme and boost cash handouts to farmers.
FARM EXPORT CURBS
India should lift curbs on exports of staples to support farmers’ incomes, agricultural economist Ashok Gulati and several farm bodies said after a pre-budget meeting with Sitharaman.
To hold down consumer prices, the government started clamping down on export of staples in 2022, while cutting tariffs on pulse and vegetable oils to allow cheaper imports.
The move has hurt rural wages, which have stagnated during Modi’s decade-long rule, as more than 45% of India’s 1.4 billion people make a living from agriculture.
TAX CUTS
India should cut import tax on six types of mobile telephone components to reduce the cost of local smartphone assembly and manufacturing units, industry body India Cellular and Electronics Association (ICEA) said in a statement.
It said India continued to have the highest tariffs on phone inputs amongst competing economies such as China and Vietnam. India cut duties this year on some phone parts, such as the main camera lenses and battery covers.
India should reduce import duty on gold, silver, and platinum bars to 4% from 15%, 10% and 12.5% respectively, the Gem & Jewellery Export Promotion Council (GJPEC) said in a statement, to help revive exports of finished jewellery.
MORE JOBS
The CII has also called for an incentive payout scheme linked to generation of jobs by private firms in labour-intensive sectors, such as textiles and tourism.
A survey after the general elections showed Indian voters were primarily worried about unemployment, decreasing incomes and inflation, fuelling discontent that led to a weak showing by Modi’s party.
The government should immediately fill job vacancies and restore pension benefits from a now-scrapped scheme, 10 labour unions that participated in Sitharaman’s pre-budget talks said in a joint statement.
TAX REFORMS
At least two industry bodies have called for steps to simplify tax regimes.
India’s capital gains tax provisions should be simplified into two or three broad buckets, the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a statement.
The government should also reform an indirect tax, the Goods and Services Tax, with fewer tax slabs and extend it to more industries, FICCI added.