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Why Cut in Corporate Tax Rate for New Manufacturing Units makes India Stand Out Among Asian Peers FM Nirmala Sitharaman announced a cut in the corporate tax rate for manufacturing such units to 17 per cent which is likely to attract MNCs to establish units in India, especially when companies are looking beyond China given its trade war with the US

By Vinayak Sharma

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Aiming towards $5 trillion economy, Finance Minister Nirmala Sitharaman on Friday declared a tax rate of 15 per cent for new assembling units in the nation that start manufacturing before 2023. With the addition of surcharge on it, the tax rate will be 17 percent. After the FM'S announcement, it has become easy for the Indian manufacturers to look out for investment and also, Minister's statement has facilitated foreign manufacturers to contend with India on production grounds.

India as an export base

Trade tensions between the US and China have opened up the right set of opportunities for India to expand its trade offerings. They likewise make the vital possibility that India may pull in firms leaving China to utilize India as a trading base. Firms can develop their manufacturing base in India to expand its production resulting in the expansion of trade with US and creating more jobs in India.

New manufactures from abroad would step into the pool of opportunity created by the government of India, which will benefit the country with more employment, production, and collaboration with " Make In India' Programme.

Chinese materials represent about 20 per cent of US material imports, while Indian exports represent just somewhat over 5 per cent. Additionally, Chinese worldwide machinery price add up to about $1.2 trillion, while India's are $27 billion. Indian machinery fares would increase by over 40 per cent if India assumes control over an insignificant 1 per cent of Chinese exports.

US- China trade war- A happenstance for India

India has finally taken a great step to take advantage of US-China trade war. China's present pace of significant worth included expense is 16 per cent for assembling units and it includes other extra charge. The unending acceleration of trade pressures between the US and China has prompted an interruption of settled supply chains between the two nations. Firms trading from China, both local and remote, have started to move to different nations in Asia. By July this year, more than 50 noteworthy worldwide firms, from Nike to Nintendo and Panasonic, had shown the probability of their migration, referring to the danger potential ineligibility for US.

The government has taken a historical step to create a platform for the new and already existing foreign manufacturers to turn their heads towards India for trade. "India is prepared to pull in new assembling units from world over," Sitharaman said in the conference on Friday. "Assembling units ought to have office and maintained the organizations in India to gain tax benefit. Major principal is that the exemptions on expenses should be cut down."

Vinayak Sharma

Entrepreneur Staff

Correspondent, Entrepreneur India

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