Missed opportunities from India's Budget 2021
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India's Finance Minister Nirmala Sitharaman unveiled the annual budget on February 1. We tell you what was missing from her speech.
India's Finance Minister Nirmala Sitharaman unveiled the annual budget on February 1. We tell you what was missing from her speech.
The manufacturing industry was expecting more incentives including more support for the expansion of distribution and diversification of supply chains. Even though the schemes announced will indirectly benefit the manufacturing sector there are no "dedicated" promises to this effect. No distinct policies that could help India-based organisations establish a strong foothold in global markets were part of the annual budget.
The pandemic has made it amply clear that supply chains cannot be dominated by one particular country. The world's leading economies are rethinking their business strategies and are looking at other nations for sourcing.
India has an exclusive opportunity to emerge as the preferred destination for them. But besides the announcement of seven mega textile parks to boost exports and attract investments, not much has been promised on making Indian manufacturing globally competitive.
There is also no mention of how foreign companies will be encouraged to move to India. The FDI limit in the insurance sector has been hiked from 49 per cent to 74 per cent. Because several multinational companies are moving out of China owing to the US-China trade war and the COVID-19 pandemic.
More than 40 per cent Japanese companies are looking to shift their base from China. Additionally, more than 1,000 American companies have already shut operations in China. They include assembly partners to giant players in the field of electronics and tech. The budget does not lay out any clear plan on how India intends to tap into this opportunity.
Also read: Union Budget 2021: What got cheaper, what is now costlier
The hospitality and tourism sectors, which were the worst hit sectors due to the pandemic were absent altogether from budget announcements. This is despite the fact that in 2019, the travel and tourism sectors contributed nearly 194 billion dollars or 6.8 per cent of India's GDP.
Contrary to what budget experts suggested, there are no major tax changes - The income tax slabs remain the same, and only some incremental changes have been announced with small benefits for home-buyers and senior citizens.
And until now, interest earned on the provident fund was exempted from income tax. But budget 2021 changes that! If your provident fund or PF contribution is 2.5 lakh rupees and above, you will no longer be able to seek tax exemption on the interest earned starting the next financial year.