India Inc says tax giveaways will revive their animal spirit

MUMBAI: Hailing the massive tax giveaways to corporates to the tune of Rs 1.45 lakh crore, industry captains said the decision will not only boost the economy but will also make the industry more competitive globally.

Finance minister Nirmala Sitharaman announced a number of changes in the direct tax regime, including a 10 percentage points cut in corporation taxes to an effective 25.17 percent, which is more or less on par with the US and many other developed economies.

"The steps to pump-prime the economy will lead to a big reset and revive the animal spirits in corporate India. The tax reduction will not only lead to economic buoyancy but will also make the industry more competitive globally," Aditya Birla Group chairman Kumar Mangalam Birla said.

He further said these measures only reaffirm the government's willingness to move beyond incrementalism and act with conviction to pursue economic reforms.

Tata Steel managing director TV Narendran welcoming the move said, "I guess the challenge for the government is to find alternate revenue streams to support the massive infrastructure spends planned."

JSW Group chairman Sajjan Jindal said, "the sharp tax cuts and special tax rate for fresh investments in manufacturing would not only revive sentiment but also enhance our competitiveness."

SBI chairman Rajnish Kumar opined such the move will boost corporate bottomlines, bring down prices. "Additionally, the move to incentivise setting up new manufacturing units comes at the most opportune time for MNCs who could be actively looking for opportunities to invest globally."

JM Financial Group managing director Vishal Kampani, said, "these bold moves will kick-start the next big economic upcycle as it will revive the consumption story."

Spicejet chairman Ajay Singh said, "this move, the latest in a series of a steps taken by the government to spur growth, demonstrates its ability to come up with big solutions to big problems."

IIFL Group's Nirmal Jain said the Rs 1.45 lakh crore stimulus to reboot the economy is a bold move that will unleash animal spirits. "This can certainly turn the tide for the economy and the markets. It's a move towards a simpler and lower tax regime with minimal incentives and exemptions."

Hailing the decision, Piramal Group's Ajay Piramal said, the tax cuts can help the crippled NBFC sector save Rs 250-300 crore that can potentially be redeployed as loans.

Mercedes-Benz India chief executive Martin Schwenk said the move is a shot-in-the arm as it is directly correlated to economic growth as it will boost manufacturing apart from promoting investment, higher profitability and buying sentiments."

Whirlpool of India managing director Sunil D'Souza said allowing companies to use their 2 percent CSR spend on incubation will jump shift R&D and innovation.

Kalyan Jewellers chairman TS Kalyanaraman said, "lower tax rate will increase transparency in the gems and jewellery industry which will ultimately lead to a shift from unorganised to organised sector."