Budget should extend PLI benefits to more sectors to boost manufacturing: Assocham

Union finance minister Nirmala Sitharaman is scheduled to present the union budget for FY24 on February 1, 2022.

Speaking to media on Thursday, Sumant Singh, President, Assocham said that, on the backdrop of greater demand for incentives by manufacturers in some sectors compared to the allocated amount, government may consider allocating more fund some of the existing PLI schemes including that for the solar modules. He also recommended reallocation of funds from the schemes which have witnessed lesser takers to those where the demand is higher.

“The way the PLI schemes are configured, there are clearly more applicants that are coming in then there is money to be allocated, not in all sectors but certainly in some sectors. So one of the things is that the government reallocate fnds between the PLI areas where, in one PLI scheme the full funds were not allocated because there wasn’t sufficient demand, it can be allocated to other PLIs,” he said.

Talking of the incentive scheme for solar modules, Sinha, said that although, Centre has come up with the second tranche of PLI for solar modules, the demand would be much higher than the allocated amount. 

In September, the union cabinet approved the second tranche of PLI scheme worth ₹19,500 crore for domestic manufacture of solar photovoltaic (PV) modules. 

Among other pre-budget recommendations, the industry body said the government should increase the exemption limit for income tax to at least ₹5 lakh so that more disposable income is left in the hands of consumers and the economy gets a consumption boost and further leg-up in the recovery. Without accounting for rebates, the present exemption limit is ₹2.5 lakh for the assessees. 

Sinha said buoyancy in both the direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit. 

“The government must respond to the proactive steps other nations are doing to support the production of green hydrogen as India strives to become a major energy producer. Attention should be given to sustainable and green industries to promote job growth and a green economy. Economy security bigger than manufacturing security,” he said. 

Advancing the green economy, achieving energy independence, making investments in green industries, and reducing the use of fossil fuels are all steps for self-sufficiency.

“Boosting consumption by leaving more money in the hands of the consumers, is a low hanging fruit for a further recovery in economic growth, ” said Deepak Sood, Secretary General, Assocham.

The chamber also noted that along with the consumption, the other path to a sustainable growth would be further promoting investment. In this direction, Assocham has suggested the the 15% corporate tax rate for new investments in manufacturing can be extended to all sectors, including services. 

Suggesting another relief measure, it said the interest for late payment of the GST should be reduced to 12% from 18%.