'First step towards realising Make in India': Experts hail FM's measures

Finance Minister Nirmala Sitharaman addressing the media

Finance Minister Nirmala Sitharaman announced a slew of measures on Friday to revive sagging investment in Asia's third-largest economy, including a cut in corporate taxes.

Sitharaman told a news conference that the effective corporate tax rate will be lowered to 25.75 per cent from 30 per cent.

A. Prasanna, Head of Research, ICICI Securities Primary dealership Pvt Ltd

"This is a long overdue and hugely positive move by the finance minister. Nearly 50 per cent of the companies were paying effective tax rate of below 30 per cent under current rules. The new rates simplify the tax architecture and will give a fillip to investments and jobs. This is the first concrete step towards realising Make in India."

"The fiscal impact will be large, but right now the need for economic recovery should take priority. I expect the RBI to accommodate this fiscal expansion via additional open market operations to keep interest rates in check."

Mahendra Kumar Jajoo, Head of  Fixed Income, Mirae Asset Global Iinvestments

"On one side is the reality that 1.45 trillion rupees is sacrificed. On the other side is the hope that it will be recovered through economic recovery."

"This kind of a revenue recovery will be pretty challenging. So right now, it is negative for bonds and positive for equity markets."

Ajay Bodke, CEO PMS, Prabhadus Lilladher

"In a major boost to revive flagging animal spirits and position India as one of the most attractive business destinations, the government has announced a slew of measures that would act as a force multiplier for the flagging economic engine. By slashing corporate tax rate to 25 per cent from 35 per cent (22 per cent from 30 per cent without exemptions) for existing domestic companies and an extremely attractive rate of 15% for new companies setting up manufacturing operations after Oct. 1, 2019 and commencing operations before 2023, the government has rolled out a red carpet that would ensure hundreds of billions of dollars of FDI and FII flows over the medium term."


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