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India's policy reforms drive manufacturing growth through simplified taxation and infrastructure
Reduced bureaucratic hurdles and regional development set to bolster foreign and domestic investment
India's manufacturing landscape is on the brink of a major shift as the nation implements comprehensive policy reforms that are set to revolutionize the economic landscape. By streamlining the taxation processes and boosting infrastructure, the country has become an attractive destination for both domestic and foreign investors.
The Economist Intelligence Unit (EIU) sees the improvement in logistics, simplified tax procedures, and enticing incentives as key factors in positioning India as a prime destination for competitive manufacturing in the region. These reforms have not only attracted businesses but also fueled robust economic growth in the country.
Primarily, significant efforts were made to improve India's taxation system by simplifying processes and reducing complexity in conducting business in the country. The introduction of the Goods and Services Tax (GST) in 2017 revolutionized the country's tax landscape, eliminating state-level tax discrepancies and boosting government revenue.
In addition, corporate tax rates have been lowered to encourage investment, with eligible firms given the option to avail themselves of lower tax rates and deductions. The government has also introduced attractive incentives through the Production Linked Incentive (PLI) schemes, and the implementation of the Insolvency and Bankruptcy Code reflecting the government's push to ease land acquisition processes aimed to gradually address bottlenecks.
Furthermore, the Indian government addressed its infrastructure deficiencies to bolster its plan. Notable initiatives like the Bharatmala, Sagarmala, Udaan, and the National Infrastructure Pipeline ushered the transformation of India's transportation network, port infrastructure, and regional airports.
Beyond central government initiatives, state governments in India have taken proactive measures to support industries through Special Economic Zones (SEZs). Some states have also relaxed labor laws within these SEZs, to foster a more flexible employment environment.
These concerted efforts are poised to improve the overall business landscape in the country. It will significantly reduce logistic costs, enhance connectivity, and facilitate the smooth movement of goods across the region, while the taxation initiatives have led to a more efficient intra-country trade system and minimized bureaucratic hurdles.
