Greater availability of loans, reduce regulatory compliance for greater ease of doing business and may even consider the industry’s demand for a further cut in tax rates to 20 per cent.
Stung by DeMo and further hit by a rushed GST rollout, small businesses have been smarting under the twin blows. Last year’s Budget had reduced the corporate tax on companies with turnover of under Rs 250 crore from 30 per cent to 25 percent. With cess, their median tax rate was 34 per cent. SMEs have been particularly affected by lack of access to loans. Centre may ensure greater availability of loans, reduce regulatory compliance for greater ease of doing business and may even consider the industry’s demand for a further cut in tax rates to 20 per cent. The latter is least likely though.
Raise customs duty to promote Make In India.
On the other hand, rising protectionism will help all domestic businesses as the Centre is likely to raise customs duty to promote Make In India. Last year’s Budget too made a departure from years of cutting customs duty and actually raised them which increased the domestic prices of automobiles, mobile phones, toys, perfumes, even diamonds and footwear. This Budget is likely to follow suit, specifically in components. Consumer Electronics and Appliances Manufacturers Association has prodded the Centre to raise import duties on finished goods such as ACs, TVs, washing machines and refrigerators. Society of Indian Automobile Manufacturers too has asked for an increase in import duty on fully-built commercial vehicles from the current 25% to 40%. These would raise the cost for the consumer but will benefit domestic businesses indirectly as they will be able to raise prices.
If the outgoing government could bring cheer to these 3 constituencies, it may have achieved its objective of appeasing the most unhappy before the model code of conduct kicks in.