Bengaluru, Karnataka – July 5, 2019 – The union budget released by Finance Minister, Ms. Nirmala Sitharaman, is a significant one for India’s manufacturing sector as well as the machine tool industry. As the first ever budget presented by a full-time woman finance minister in India the budget looks a promising one to arrest downturn and steer the country’s economy in the right direction.
The lower 25% corporate tax on companies with a turnover of up to Rs. 400 crore is expected to boost investments. It is a positive step towards the development of the MSME sector and enhancing their production capacities. Machine tool industry is the backbone of MSMEs and this bodes well for machine tool manufacturers. Indian machine tool industry has around 1000 units engaged in the production of machine tools, accessories/attachments, subsystems and parts. More than 90% of these are in the MSME sector and this sector stands to benefit immensely from this budget. The ministry’s move will therefore eventually give an uptick to the machine tool industry’s business.
Capital goods sector occupies a strategic position in the country’s economy as it provides the machinery and equipment needed for many industries engaged in manufacturing of goods and services. Conventionally the Indian capital goods sector has been dependent on imports. The reduction in customs duty on certain raw materials is expected to promote indigenous manufacturing. The government’s move towards imparting new age skills like artificial intelligence, internet of things, big data, 3D printing, virtual reality, and robotics as a part of the education curriculum can create a large pool of manpower with industry-relevant skills. This will also create avenues for new jobs.
The increase in budget outlay for defence, infrastructure development including roads and railways, power, and affordable housing is expected to elevate the demand for construction equipment as well as machines. Machine tool industry needs to gear up to the opportunities that are likely to rise in future. Vibrant manufacturing is imperative for India’s growth. The incentives announced in the budget are but a beginning. It may take some time for the sops to trickle down to the end users resulting in demand for goods and services. Notwithstanding this, the momentum given by the budget is expected to spur manufacturers to renew their activities with vigour. Once such manufacturing hits top gear the country will be on the right track to not just meet $3 trillion targets this year but may join the exclusive $5 trillion economies in the near future.