The union budget aptly focused on promoting exports, promote India as a manufacturing hub in clean-tech manufacturing, and self-reliance in select sectors. The promotion of exports has been a major area of focus for this budget and the initiative to replace the existing Special Economic Zone (SEZ) policy with a new regulation would provide the much needed push for the SEZs in the country.

Further, the Government’s decision to onboard state governments as partners for developing a robust industrial land bank – as ‘enterprise and service hubs’, including all large existing and new industrial enclaves – under the purview of the new regulations for exports enclaves will enable optimal utilisation of available infrastructure and promote competitiveness of manufacturing.

In addition to this, the proposed reforms in customs administration of SEZs – making it IT-driven and integrated to the Customs National Portal with a focus on higher facilitation and with only risk-based checks – will further ease doing business by SEZ units. Clean-tech manufacturing presents a large opportunity for us as a country. The Government has outlined its focus in the emerging sectors which promote technology adoption, innovation, prioritise environmental sustainability and resilience. The battery swapping policy for introducing the interoperability standards will be a welcome initiative to further boost growth in the EV space.

Private sector investments have been promoted in the battery or energy-as-a-service concept for improving the EV ecosystem, which is a necessary driver for the growth of the EV sector. Further, the design-led manufacturing scheme for promoting 5G in telecom sector as part of the PLI scheme will further boost the electronics and telecom manufacturing sector in the country. The continuation of push for high-efficiency module manufacturing through the PLI scheme allocation of INR 19,500 crore will further create new avenues for investments in this sector. This is also aligned with the emerging global priority of investments in sectors focusing on clean energy, climate change and environmental sustainability.

The Aatmanirbhar Bharat Abhiyan and Make in India initiatives got further fillip through the phasing out of concessions in the imports of capital goods for certain products where sufficient domestic manufacturing capacity is available. Sectors like electronics, medical devices and chemicals have seen reduction in customs import duties on intermediary products which can aid in value addition and further exports from the country. On the other hand, the budget clearly disincentivised import of products for which the domestic production capacity is already available.

The defence manufacturing sector is another large beneficiary of this year’s budget with 68% of the capital procurement budget being earmarked for the domestic industry in 2022–23 (up from 58% last year), which should bolster investments in domestic manufacturing in this key sector.

The extension of the concessional tax regime of 15% tax for newly incorporated domestic manufacturing companies till 31 March 2024 is also a good move to continue the momentum of investment flows – both from domestic as well as foreign firms, in addition to the recently launched PLI schemes. Together, these initiatives will help establish a globally competitive business environment for companies, expedite capital investments in the manufacturing sector and create new jobs.

The author is Partner and Leader Industrial Development, PwC India

(Shubhojeet Chakravarty, Director– Capital Projects & Infrastructure also contributed to this article)