Last year’s budget displayed flexibility and reflected a progressive approach to a roadmap for rapid economic recovery. Its structured approach sought to initiate growth by focusing on the six pillars of health and wellbeing, infrastructure, human capital, inclusive growth, innovation and R&D, and ‘minimum government and maximum governance’. It demonstrated the strategic commitment of the government to the overall development of India. From a successful immunization campaign to ensuring well-being and emphasis on Production Linked Incentive (PLI) schemes to creating and nurturing a global manufacturing champion for an Atmanirbhar India, to enhance opportunities for our youth through several schemes and Significant progress was made in the last year, focusing on innovation and R&D to strengthen the overall research ecosystem.
Despite the unprecedented setbacks caused by the pandemic in 2020 and the second wave of Covid in the first quarter of 2021-22, the year delivered on promise, with the entire economy showing a green shoot in the second half. The coming quarters present an encouraging picture for industries across sectors including consumer durables, electronics, energy, electricals and wiring devices. The Centre’s intent to reduce the compliance burden on businesses and the PLI scheme together is poised to propel the economy.
We expect the 2022-23 budget to bring in reforms that will help increase consumption by putting resources in the hands of consumers. Consider the impact: If consumers have more spending power, sales increase, support local production, which in turn drives the Make in India agenda, and leaves a positive impact on the overall economy. At the same time, rising health care expenses demand an increase in the limit of deduction on health insurance premiums – this will lead to a boost to health policies. Customizing tax slabs to help salaried professionals will also help, be it a larger standard deduction, tax-off on home-loan interest or the inclusion of a wider set of mutual funds under 80C deduction.
Against this background, our efforts to accelerate the growth of the consumer durables and electronics industry are playing a vital role in our economic revival. We expect the government to examine items that will encourage domestic manufacturing and expect a hike in import duty on fully assembled audio products. Audio technology is an emerging segment and with new players entering the market, the demand and the ways to meet it are at an all-time high. We expect some audio tariff constraints to encourage domestic manufacturing.
Additionally, GST rationalization can play an important role in increasing market consumption. Consumer durables like ACs and TV sets need relief. Consumers prefer products that offer a value proposition, and these are no longer ‘luxuries’ as they have become common household items. Reducing their GST burden from 28% to 18% will help reduce price pressure, boost affordability and thus increase the penetration level of ACs in India. In addition, the energy efficiency of ACs has steadily increased and they now offer additional features such as air purification, which is important in urban markets. Similarly, while TV screens larger than 105 cm have been slotted as premium, they have now become the most sought-after model, and hence we expect the government to reduce the GST on LED screens (above 105 cm) to 28%. will reduce it to 18%. This will help us strive towards making premium technology products accessible to potential customers who have been held back from upgrades due to high cost of adoption. Keeping premium screens in the lower GST slab would be a progressive step towards democratizing such technology.
We are also looking forward to a Phased Manufacturing Program (PMP) for TVs to boost domestic production.
While the government has approved the investment under its PLI scheme as a step towards its goal of Atmanirbhar Bharat, we are asking policy makers for exports under the Remission of Duty and Taxes on Export Products (RODTEP) scheme. Will urge you to review the incentives and consider increasing them. This. This will encourage exports and reduce supply-chain challenges that have led to a dramatic increase in logistics costs.
Given the government’s agenda to encourage manufacture and sale of Electric Vehicles (EVs), localization of EV charger manufacturing will help in faster EV adoption. Thus it is an expectation that the budget will help in reducing the cost of component imports as compared to imports of pre-assembled EV chargers.
To encourage exports and place locally manufactured products on a globally competitive platform, we would expect more financial incentives especially for products with 30-40% domestic value addition. This will help in industrial development in the country.
The pandemic has somewhat increased awareness and penetration of insurance. From the point of view of end consumers, reduction in GST on insurance premiums and addressing double taxation will provide relief and allow people to save more, thereby increasing their purchasing power.
Lastly, we look forward to a pro-growth Union Budget for 2022-23 and look forward to allocations that are balanced and thoughtful, so that it not only accelerates India’s economic growth, but also directly impacts the end consumers. Provide benefits.
Manish Sharma CEO, Panasonic India and South Asia; and Chairman of FICCI Electronics and White Goods Committee
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