What India’s Budget 2019 means for Advanced Manufacturing and Defence?

By Prasenjit Dhar

The 2019 Indian budget has focused on making the country a more attractive investment destination for large multinationals and thereby boosting the Government’s flagship ‘Make in India’ programme.

In her statement, the Finance Minister, Nirmala Sitharaman, said that “the government will launch a scheme to invite global companies through transparent competitive bidding to set up mega manufacturing plants in the sunrise and advanced technology areas”. These include semiconductor fabrication, manufacturing of solar PV cells, high capacity storage batteries, solar electric charging equipment, and IT hardware. This forms a key part of India’s vision to become a USD five trillion economy in five years.

The UK India Business Council supports these measures and notes that in order to succeed, larger manufacturers need to also bring in and develop key supply chain players and technology suppliers to set up in India (possibly in collaboration with domestic Indian companies). This is a necessity if a mature manufacturing ecosystem is to emerge in India.

In this regard programmes such as the ‘Access India Programme’ in the UK, will be integral in helping to support innovative SMEs in entering India and working alongside the OEMs and Primes. The UKIBC is proud to have partnered with the High Commission of India on this programme since its inception.

In other measures to encourage manufacturing in India, the Government also proposed significant changes in the basic customs duty rates for several products. This will help boost the value-added manufacturing sector in particular – a model which India rightly aspires to develop a global competitive advantage in. The exemption of basic customs duty on defence-related products and equipment, as recommended in our recent UKIBC report, ‘How the UK can Make in India’, will also help international manufacturers to export more easily to India.

It has been noted that the indirect tax and custom duty propositions in this budget are primarily aimed at promoting ‘Make in India’ and increasing the ease of doing business in the country. In particular, the announcement of a ‘Legacy Dispute Resolution’ mechanism rightly acknowledges the unintended consequences resulting from the GST’s implementation which has had negative effects on businesses decisions to invest further in India. This will hopefully introduce further consistency in the implementation and enforcement of the GST, as called for in our ‘How the UK can Make in India’ report.

If you would like to find out more about UKIBC’s work supporting advanced manufacturing, engineering, and defence collaboration between the UK and India, please get in touch with our Advanced Manufacturing and Engineering Sector Manager, Prasenjit Dhar, at prasenjit.dhar@ukibc.com

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