Budget Highlights – Industry Specific

 

[button link=”#edutech”] Edu Tech Companies[/button] [button link=”#realty”] Realty & Infrastructure[/button] [button link=”#pharma”] Pharmaceuticals and Healthcare[/button] [button link=”#fmcg”] FMCG, Food and Beverage[/button] [button link=”#ecom”] E-commerce[/button] [button link=”#insurance”] Insurance[/button] [button link=”#power”] Power and Energy[/button] [button link=”#it”] IT and ITeS[/button] [button link=”#msme”] MSMEs[/button] [button link=”#startup”] Start-ups[/button] [button link=”#petrochem”] Petrochem/Chemicals[/button] [button link=”#textile”] Textile[/button] [button link=”#steel”] Steel/Metal[/button] [button link=”#defence”] Defence[/button] [button link=”#cooperative”] Co-operative Society[/button] [button link=”#manufacturing”] Manufacturing in general[/button] [button link=”#electronics”] Electronics[/button] [button link=”#agriculture”] Agriculture[/button] [button link=”#automobiles”] Automobiles[/button] [button link=”#bfsi”] BFSI, Fintech and NBFC[/button] [button link=”#exports”] Exports[/button] [button link=”#retail”] Retail[/button] [button link=”#sezs”] SEZs[/button] [button link=”#transport”] Transportation and Logistics[/button] [button link=”#general”] General[/button]

 

 

Edu Tech Company

1.‘One Class-One TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels to enable the students of rural India to have high quality learning through limited resources.

2. The initiative of Digital DESH-Stack -e portal will be launched to empower citizens to skill, reskill or upskill through on-line training.

3. Digital University will also be set up to provide access to students to quality education. High-quality e-content in all spoken languages will be developed for delivery via internet, mobile phones, TV, and radio through Digital Teachers.

4. World class foreign universities and institutions will be allowed to offer courses in Financial Management, Fintech, Science, Technology, Engineering and Mathematics free from domestic regulations, except those by IFSCA in the GIFT City, in order to facilitate the availability of high- end human resources for financial service and technology.

 

 

 

Realty and Infrastructure

1. To effectively utilize the existing infrastructure, the Special Economic Zones Act will be replaced with a new legislation which will enable States to partner with Development of Enterprise and Service Hubs;

2. Railways, roads, mass transports, airports, ports, waterways, and logistics infrastructure have been identified as seven key engines to propel PM Gatishakti to aid in proper implementation of projects;

3. Infrastructure industry has witnessed major hike of 34.5% in capital expenditure;

4. There is a plan to expand National Highways network up to 25,000 km to improve connectivity and boost employment in the infrastructure sector;

5. The Public Private Partnership (PPP) model will be used to develop multimodal logistics park at four locations. Also, multimodal connectivity will be established between railway stations and mass urban transport;

6. The railways and postal networks will be integrated to smoothen the movement of parcels;

7. Energy storage system as well as data centres systems to be included in infrastructure;

8. The PPP model will be used to award eight ropeway projects for a length of 60 kilometres under National Ropeways Development Programme;

9. The resources for Green Infrastructure will be mobilised through issuance of sovereign green bonds to boost development of green infrastructure at a low rate;

10. Provisions pertaining to bonus stripping and dividend stripping proposed to be made applicable to securities and units. The definition of “Units” has been modified to include the Units of Business Trusts such as InvIT, REIT and AIF.

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Pharmaceuticals and Healthcare

1. All newly incorporated manufacturing units will get an advantage of availing the lower tax rate of 15% till March 2024;

2. An open platform will be rolled out for digital registries of various health providers, health facilities, unique health identity, consent framework and universal access to health facilities through Ayushman Bharat Digital Mission to create a comprehensive data and also provide ease of access to health records and facilities;

3. More than 350 exemption entries under Customs are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines for which sufficient domestic capacity exists;

4. Pharma Companies will not be allowed to claim any expenditure disguised as a benefit provided to a doctor;

5. Custom duty /health cess exemption on surgical needles imported for manufacture of surgical sutures;

6. Concessional rate of customs duty on certain drugs and medicines supplied free of cost to patients will be valid till 31st March, 2023

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FMCG, Food and Beverage

1. All newly incorporated manufacturing units will get an advantage of availing the lower tax rate of 15% till March 2024;

2. Higher minimum support price (MSP) allocation will drive consumption of fast-moving consumer goods (FMCG) products;

3. Comprehensive scheme will be implemented to encourage the domestic production of oil seed and reduce the dependency on import;

4. Rate of customs duty on Cocoa Beans, whole or broken, raw or roasted to be reduced from 30% to 15%;

5. Custom duty on ethyl alcohol and other spirits (denatured) to be reduced from 30% to 5%;

6. Custom duty on sweet biscuits, wafers and waffles to be reduced from 45% to 30%;

7. Custom duty on residues and waste from food industries to be reduced from 30% to 15%

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E-commerce

1. Rationalization of import duties as part of “Make in India” initiative is likely to facilitate consumption bringing sustainable growth for consumer, e-commerce, and retail sector;

2. A simplified regulatory framework will be implemented for the purpose of exporting jewellery through e-commerce, thereby incentivising the export of jewellery through e-commerce;

3. Duty concession will be provided in consumers electronic devices, wearable, and hearable devices;

3. Universal Service Obligation Fund will be allocated for the purpose of improving and expanding the broadband and mobile service penetration in rural India to provide e-commerce sector the opportunity to have wider access in rural areas.

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Insurance

1. The post office will also undergo a change in its existing system. The Budget aims to implement core banking system in all the post offices to lead to an additional flow of money in insurance schemes as well and build a regulatory framework for Postal insurance schemes;
2. Surety bonds have been introduced to boost insurance revenue and capital and lead to investment of foreign capitals in India through the specialised insurance companies;

3. The focus on technological involvement in the agricultural sector will also encourage the insurance in the agriculture field.

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Power and Energy

1. INR 195bn under PLI Scheme has been allocated to encourage the domestic Production of solar modules from polysilicon;

2. Energy Service Company business model will be adopted in order to promote energy savings and efficiency;

3. The resources for Green Infrastructure will be mobilised through issuance of sovereign green bonds to boost the development of green infrastructure at a low rate;

4. The rate of duty on Solar Cells (other than those exclusively used with ITA-1 items) has been increased from 20% to 25%. Effective Basic custom duty rate on these goods would continue to be ‘7.5%’ till 31st day of March, 2022;

5. The rate of duty Solar Modules (other than those exclusively used with ITA-1 items) has been increased from 20% to 40%. Effective Basic custom duty rate on these goods would continue to be ‘7.5%’ till 31st day of March, 2022;

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IT and ITeS

As the Budget is structured around Digital India almost every sector is expected to receive digital aspect driving further growth in technology and related sectors. The number of digital initiatives planned (digital currency, PM Gati Shakti, e-passport, Kisan drone, etc) will create significant direct and indirect opportunities for the technology and business process management sector. Many of these will have downstream opportunities for software, hardware, and services companies.

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MSMEs

1. The emergency credit line guarantee scheme will be extended up to March 2023 and the guaranteed cover will be expanded by INR 500 billion to cover an amount of INR 5,000 billion.

2. The Credit Guarantee Trust for Micro and Small Enterprises scheme will be revamped with required infusion of funds to facilitate additional credit of INR 2,000 billion for MSMEs and expand employment opportunities.

3. Raising and accelerating the MSME performance (RAMP) programme with an outlay of INR 60 billion over a period of five years, will greatly boost the MSME sector.

4. Udyam, e-Shram, NCS and ASEEM portals will be interlinked. Their scope will be widened. They will now perform as portals with live, organic databases, providing G2C, B2C and B2B services relating to credit facilitation, skilling, and recruitment and will further formalise the economy and enhance entrepreneurial opportunities for all.

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Start-ups

1.Tax exemption extended to March 2023

2. Period of commencement of manufacturing or production by eligible new manufacturing domestic companies extended by a year to 31 March 2024

3.Support in agriculture and rural enterprises for farm produce value chain

4. Facilitate “Drone Shakti” through varied applications and for Drone-As-A-Service (DrAAS)

5. Required courses for skilling to be started in select industrial training institutes in all states

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Petrochem/Chemicals

1. Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining are being reduced, while duty is being raised on sodium cyanide for which adequate domestic capacity exists.
2. More than 350 exemption entries are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines for which sufficient domestic capacity exists.

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Textile

1.To incentivise exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods.

2. The allocation for textile industry stands at about INR 12,382.14 crore, which is about 8.1 per cent higher than the revised budget allocation of last year.

3. Production Linked Incentive (PLI) scheme and PM Mega Integrated Textile Region and Apparel (PM MITRA) scheme also saw an allocation of INR 15 crore each for 2022-23 and INR 105 crore towards Raw Material Supply Scheme, which has already been approved for implementation during period from 2021-22 to 2025-26.

4. About INR133.83 crore has been allocated for Textile Cluster Development Scheme, and hence the total budget allocation for Research and Capacity Building in textiles has increased by 73.4 per cent to reach about INR 478.83 crore in 2022-23.

5. Provision for conditional exemptions for import of specified items like fasteners, inlay cards, lining and inter-lining materials, wet blue chrome tanned leather, etc. to be used in manufacture of textile or leather garments meant for exports and provision for conditional exemptions for import of specified items like buckles, buttons, locks etc. to be used in manufacture of leather or synthetic footwears, or other leather products meant for exports.

6. BCD Exemptions on certain goods are being withdrawn for Machinery or equipment for effluent treatment plant for leather industry and 292 goods specified in List 27 to notification No. 50/2017- customs designed for use in the leather industry or the footwear industry, like Air blast dust removing machine, Automatic Drying machine etc.

7. More than 350 exemption entries are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines for which sufficient domestic capacity exists.

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Steel/Metal

Customs duty exemption given to steel scrap last year is being extended for another year to provide relief to MSME secondary steel producers. Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked in larger public interest considering prevailing high prices of metals

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Defence

Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model. 25% of the R&D Budget is earmarked for the industry, start-ups and academia.

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Co-operative Society

1. Reduction of the Alternate Minimum Tax (AMT) for co-operative societies from current 18.5% to 15% at par with private companies.

2. Reduction of surcharge on co-operative societies from the present 12% to 7% for those having total income of more than INR 1 crore up to INR 10 crore.

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Manufacturing in general

1. To promote “Make in India”, a one-year extension to the due date (extended to 31 March 2024) for commencing commercial production by new manufacturing units has been proposed. Section 115BAB of the Income-tax Act provides for an option of concessional rate of taxation @ 15 % for new domestic manufacturing companies provided that they do not avail of any specified incentives or deductions and fulfil certain other conditions. This should provide new manufacturing projects, such as those that have opted for the Production linked incentive scheme, an additional window of time for income tax concession.

2. Customs duty rates are being reduced on inputs, like specialised castings, ball screw and linear motion guide, to encourage domestic manufacturing of capital goods.

3.For certain products where sufficient domestic manufacturing capacity is available. The government has phased out customs and tariff exemption.

4. PM’s Gati Shakti master plan has introduced public investment to modernise overall infrastructure in the nation which shall in turn boost the manufacturing sector.

5. There has been an additional allocation to the Production linked scheme which will certainly bring in more investments into the economy. Further, export incentives and concessions have been introduced in import duties on raw materials to boost manufacturing.

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Electronics

1. The government is calibrating customs duty rates as a part of phased manufacturing programme (PMP) to provide a graded rate structure and facilitate domestic manufacturing of electronic items such as wearable devices (upto 20%), printed circuit board assemblies (upto 15%) and batteries(up to 15%) .

2. To enable manufacturing of high growth electronic items, duty concessions are also being given to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items. The rates have been reduced to 2.5% for Camera lens for use in manufacture of Camera Module for Cellular Mobile Phone, 5% for Specified parts for use in manufacture of transformers of chargers/adapters, 10% for items used in manufacture of x-ray items.

3. Customs duty concessions introduced on capital goods used by electronics industry and raw materials and parts for use in manufacturing electronic items.

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Agriculture

1.NABARD will be facilitating a fund with blended capital, raised under the co-investment model, to finance start-ups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these start-ups will include, inter alia, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support.

2. Use of ‘Kisan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients.

3. A rationalised and comprehensive scheme to increase domestic production of oilseeds will be implemented reducing imports of oilseeds.

5. The government plans to make an amount of 2.37 lakh crore direct payment of MSP value to wheat and paddy farmers. It also plans for the procurement of wheat in Rabi 2021-22 and the estimated procurement of paddy in Kharif 2021-22 will cover 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers.

6. Chemical-free Natural Farming will be promoted, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, at the first stage.

7. 2023 has been announced as the International Year of Millets. Support will be provided for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.

8. A scheme will be launched for delivery of digital and hi-tech services to farmers with involvement of public sector research and extension institutions along with private Agri-tech players and stakeholders of Agri-value chain.

9.States will be encouraged to revise syllabi of agricultural universities to meet the needs of natural, zero-budget, and organic farming and modern-day farming.

10.Five to seven per cent biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually in order to provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields.

11. New policies and required legislative changes shall be introduced to promote agro-forestry and private forestry. Further, financial support will be provided to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry.

12. More than 350 exemption entries are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines for which sufficient domestic capacity exists.
1. More than 350 exemption entries are proposed to be gradually phased out. These include exemption on certain agricultural produce, chemicals, fabrics, medical devices and drugs and medicines for which sufficient domestic capacity exists.

2.Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining are being reduced, while duty is being raised on sodium cyanide for which adequate domestic capacity exists.

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Automobiles

1. A policy for battery swapping will be introduced to aid in reducing the upfront ownership cost of electric vehicles, thereby driving customer preference towards such vehicles. This shall also encourage the private sector to develop sustainable and innovative business models for ‘Battery or Energy as a Service’;

2. Some interoperability standards will be formulated to build efficiency in operation of charging infrastructure for EVs;

3. The government will facilitate special mobility zones for EVs as well as push for clean tech and electric vehicles in public transport;

4. Production linked incentives (PLI) for EVs;

5. The government seeks to promote efficiency in the EV eco-system and will accelerate India’s transformation towards clean and green mobility.

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BFSI, Fintech and NBFC

1. Introduction of Central Bank Digital Currency (CBDC) with a view to boost digital economy by introducing efficient and cheaper currency management system. ‘Digital Rupee’ will be launched using blockchain in FY 2023;

2. Boost to credit growth of banks and non-banking financial companies (NBFCs), with schemes announced across various sectors including affordable housing, transportation and logistics, and electric vehicles (EVs);

3. Financial support for digital payment ecosystem announced in the previous Budget will continue in 2022-23 to encourage further adoption of digital payments;

4. The Emergency Credit Line Guarantee Scheme is extended till March 2023, whilst the guaranteed cover is increased to INR 5,000 billion;

5. Post offices to be included in the core banking system, thereby enabling financial inclusion and access to accounts through net banking, mobile banking and ATMs to facilitate online transfer of funds between post office accounts and bank accounts;

6. 75 Digital Banking Units (DBUs) to be set-up in 75 districts of the country by Scheduled Commercial Banks;

7. Following income earned by non-resident shall be exempt from tax:
(a) offshore derivative instruments and over the counter derivatives issued by an offshore banking unit,
(b) income from royalty and interest on account of lease of a ship paid by a unit of an International Financial Services Centre; and
(c) income received from portfolio of securities managed by a portfolio manager in an account maintained with an offshore banking unit in an International Financial Services Centre (IFSC);

8. Income arising from transfer of ship which was leased by a unit in IFSC shall be eligible for tax holiday;

9. An International Arbitration Centre will be set up in the GIFT City for timely settlement of disputes under international jurisprudence;

10. Services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City;

11. It was observed that Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year, facilitating one of the largest start-up and growth ecosystem. Holistic examination of regulatory and other frictions in this sector is suggested and therefore an expert committee is required to be set up to examine and suggest appropriate measures. (Needs to be worded better by AR)

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Exports

To incentivise exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments.

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Retail

1.With an estimated growth in gross domestic product (GDP) of over 9%, and the initiatives in the budget, consumer goods companies could expect an increase in consumption over the short to medium term driven by the thrust on investment, employment, and financial inclusion. There is also an increase in rural consumption, driven by the budgetary allocations towards infrastructure building.

2.Rationalization of import duties as part of “Make in India” initiative is likely to facilitate consumption bringing sustainable growth for consumer, e-commerce and retail sector.

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SEZs

The Special Economic Zones Act will be replaced with a new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’. This will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports.

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Transportation and Logistics

1. 1. PM GatiShakti is introduced being driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. The scope of PM GatiShakti National Master Plan will encompass the seven engines driving economic transformation, seamless multimodal connectivity, and logistics efficiency.2. PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23.3. Unified Logistics Interface Platform (ULIP) introduced which shall record the data exchange among all mode operators. This will provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and in eliminating tedious documentation.

   4. Railways will develop new products and efficient logistics services for small farmers and Small and Medium Enterprises, along with the integration of Postal and Railways networks to provide seamless solutions for movement of parcels.

   5. ‘One Station-One Product’ concept will be popularized to help local businesses & supply chains.

   6. As a part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23. 400 new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured during the next three years.

   7. One hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities will be developed over the next three years.

   8. Multimodal connectivity between mass urban transport and railway stations will be facilitated on priority. Design of metro systems, including civil structures, will be re-oriented and standardized for Indian conditions and needs.

   9. National Ropeways Development Programme will be taken up as an alternative to conventional roads in difficult hilly areas. The aim is to improve connectivity and convenience for commuters, besides promoting tourism. This may also cover congested urban areas, where conventional mass transit system is not feasible. Contracts for 8 ropeway projects for a length of 60 km will be awarded in 2022-23.

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General

1.Centre aims for accelerated voluntary corporate exits and reduce winding up of companies from 2 years to 6 months.

2. Proposal for capping the surcharge to 15 % on sale of long-term capital assets including unlisted equity shares is a desriable outcome for those holding Esops of higher value (above ₹2 crore).

3. The government proposed that people can claim ‘non-refundable advance’ from PF account to the extent of Dearness allowance and basic wages for 3 months or upto 75% of outstanding amount in account whichever is lesser.

4.Income of a non-resident from offshore derivative instruments, or over the counter derivatives issued by an offshore banking unit, income from royalty and interest on account of lease of ship and income received from portfolio management services in International Financial Services Centre shall be exempt from tax, subject to specified conditions.

 

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This is part 3 of our budget highlights. For part 1 & 2, click on the links below:

Key Highlights of Union Budget 2022-23

Budget 2022-2023 Key Highlights Part 2

 

Disclaimer

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