Union Budget to Bolster Machine Tool Industry: IMTMA
The union budget released by Finance Minister Arun Jaitley reaffirms India’s commitment to macro-economic stability and prudent fiscal management. The budget offers stability and opportunities for India’s manufacturing sector and its machine tool industry. The growth tonic for MSMEs such as 5% reduction in income tax, longer carry forward of minimum alternate tax credit and 3 year tax exemption for startups, doubling the lending target under MUDRA Yojana, etc. will ease the doing of business and create jobs.
The industry welcomes the ministry’s move to step up allocation for capital expenditure by 25.4% as against the year before and control fiscal deficit at 3.2% of the GDP for FY18 while going ahead with the planned development. The revenue deficit for next year is pegged at 1.9% as against the 2% mandated by the FRBM (Fiscal Responsibility and Budget Management) Act. Vibrant manufacturing is critical for the country’s growth. The incentives given in the budget are but an initial step. The sops will take some time to trickle down to the end users resulting in demand for goods and services. However, with the momentum given by this budget the machine tool industry will pick itself up and traverse on the right track.
The reduction in income tax to 25% is a positive step towards development of the MSME sector and enhance their production capacities. Machine tool industry is the backbone of MSMEs. The Indian Machine tool Industry has around 1000 units engaged in the production of machine tools, accessories/attachments, subsystems and parts. Of these, around 25 in the large scale sector account for about 70% of the turnover and the rest are in the MSME sector and this sector stands to benefit a lot from this budget. The ministry’s move therefore will eventually give an uptick for the machine tool industry business.
Throwing light on the budget, Mr. P.G. Jadeja, President, IMTMA said, “the customs duty reduction from 7.5% to 2.5% on three critical components (CNC systems, ball screws and linear motion guides) has been extended to all CNC machine tools under HSS code 8456 to 8463. This will have a direct bearing on the machine tool industry and enhance its development.” The setting up of the next phase of ‘Skill Strengthening for Industrial Value Enhancement’ (STRIVE) at a proposed budget of Rs.2,200 Cr in 2017-18 and 100 India International Skill Centres across the country will ensure availability of skilled manpower for the industry.
The increase in budget outlay for defence sector will leave the country with more funds for modernization and create rooms for investments in the defence sector. The budget proposal to commission railway lines of 3,500 kilometres and identification of 2000 kilometres coastal connectivity roads also bodes well for capital goods manufacturing.
Affordable housing has been a longstanding demand of the real estate sector and granting “infrastructure status” to this segment will boost construction activity and raise the demand for construction equipments and machinery.
IMTMA recently organized its flagship exhibition ‘IMTEX and Tooltech’ in Bengaluru. The exhibition showcased the machine tool industry’s potential of design, innovation and sustainability across several product lines. This was well reflected by major exhibitors closing deals and bagging orders for hundreds of machines during the event.
