Budget 2022: Pivot areas with a sight to propel India's growth

In the budget speech, post two years of pandemic hit the economy, Union Finance Minister Nirmala Sitharaman was visibly excited to announce the highest GST collection in any month, this January and also projected the Indian economy to grow at 9.2% in the current fiscal year. 

No doubt the overall performance and quick rebound of the economy are indeed reflective of the country's strong resilience and sound fundamentals. 

Budget 2022 aims to promote digital economy and fintech, technology-enabled development, energy transition, climate action with a broad view of inclusive development. 

Also Read: Budget 2022: A holistic approach to tackle economic growth
 
With the aim to further strengthen 'Make in India' and 'Atmanirbhar Bharat', Budget 2022 focuses on ways and means to equip the domestic manufacturers. 

This includes removal of customs exemption on items that are capable of being manufactured by domestic manufacturers on one hand and providing concessional duties on raw material that go into the manufacturing of intermediate products, on the other hand. 
 
Customs duty rates have been rationalised to boost domestic manufacturing of wearable and hearable devices and electronic smart meters. Parts of the transformer of mobile phone chargers and camera lens of mobile camera module and certain other items shall also enjoy the duty concessions. This will enable domestic manufacturing of high growth electronic items. 
 
Apart from changes introduced in tariff, further amendments have been introduced in customs law to reinforce the powers of DRI, challenged by the courts in a recent judgement. 
 
Further to contribute towards Atmanirbhar Bharat, the government has acknowledged that the Production Linked Incentive ('PLI') scheme has the potential to create 60 lakh additional jobs, adding that the PLI scheme has been approved for 14 sectors to spur domestic manufacturing. 

Also Read: Budget 2022 thoughful policy agenda for India: IMF's Kristalina Georgiva

The allocation has been done for manufacturing of high-efficiency solar modules and giving further boost to sectors like 'telecom and networking products' among others. This will facilitate the implementation of 5G in India. 
 
With the vision to enable the states to become partners in 'Development of Enterprise and Service Hubs', the Special Economic Zones (SEZ) Act is proposed to be replaced with a new legislation. 

This would ensure optimal utilisation of available infrastructure and enhance the competitiveness of exports. Further, reforms have been proposed which shall make the compliances IT-driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks.  
 
On the Goods and Service Tax (GST) front, the Finance Minister had applauded the taxpayer's enthusiasm for adapting to the new regime successfully. 

Amendments have been brought to streamline current practices around return filings and credit availment by the taxpayers. 
 
With a strong focus on growth and rejuvenating the economy, the budget walks a tight rope to counter the COVID induced externalities and strengthens the theme of self-reliance and ease of doing business. 
 
(The author is Tax Partner - Indirect Tax Services, EY.)