India Budget 2024: Custom duties on gold, silver slashed down to 6 from 15%
India plans to create ecommerce hubs, plans makeovers for major Indian cities
Dubai: Job creation has been assigned the highest priority in Finance Minister Nirmala Sitharaman's latest Indian budget. This includes extending one month's wages for newly employed people and supporting employers.
Employment, (up)skilling, micro and SMEs, and the middle class were listed as the top priorities for the BJP-led coalition government for the financial year 2024-25. On the wider economic front, the minister said the Indian economy and its growth remain the 'shining exception' in a world that continues to face multiple challenges.
This is the seventh time that Nirmala Sitharaman has presented the budget, and this one also provides for sizeable development works for Bihar and Andhra Pradesh. The governments in these two states are partners in the coalition government at the centre.
This is a a 360 degree impactful budget by the third term Modi government. Simplification of Foreign Direct Investment rules and promoting usage of Indian rupee for investment overseas is a very interesting move.
India cuts customs duty on gold and silver
The latest budget also slashed the customs duty on gold imports. That on gold and silver has been brought down to 6 per cent and on platinum to 6.4 per cent. A reduction in gold custom duties has been a constant demand for India's gold and jewellery trade, many of which also have a significant presence in the UAE and Gulf markets. The current customs duty on gold imports is 15 per cent.
"The duty cut on gold is a most awaited decision by the Finance Ministry - and one that has finally been made," said Shamlal Ahmed, Managing Director for International Operations at Malabar Gold & Diamonds. "This is set to significantly curtail the 'parallel import' of gold into India. By addressing this issue, we anticipate a positive impact on the economy, fostering growth and stability."
"Some changes were expected to the INR after the Budget, and there could be further drops in the exchange rates," said Neelesh Gopalan, Senior FX analyst at the Dubai-based Astra Tech. Indian stocks too have taken a subdued view of the budget, with the BSE slipping 1,000 points.
More e-commerce hubs
India plans to create e-commerce hubs, which will also attract private sector expertise and funding. This is part of multiple initiatives to jumpstart growth for MSMEs and create new jobs.
In a major push that could incentivise multiple sectors of the economy, the financial minister said that the current customs duty regime will be reviewed in the next six months. This would help ease the duty structure and reduce disputes brought on by the current regime. Also, the GST (Goods and Service Tax) structure will be further simplified.
Job creation
The Budget announced three schemes under employment generation incentives, aiming to pump in Rs2 trillion over the next five years.
Scheme A: There is the direct benefit transfer of one month's salary in three instalments up to Rs15,000 for first-time employees registered under EPFO (Employees Provident Fund Organization). “This is a positive for the entire consumption economy,” said Bal Krishen, CEO of Century Financial.
“As per the latest May data, the number of new monthly subscribers under EPF sequentially increased by 11 per cent to 985,000. Assuming the current rate holds and with almost 1 million new additions benefiting from it every month, the overall implications for India’s consumption economy would be positive.”
Scheme B: Aims to create jobs in the manufacturing sector by giving incentives to employees and employers as per their fund contribution for the first four years of employment.
Scheme C: Will provides reimbursement to employers of up to Rs3,000 a month for two years towards their EPFO contribution for each additional employee.
This year’s Indian budget is a pivotal 'nation-first' initiative, especially for its employment scheme that aims to significantly reduce unemployment and stimulate economic growth. By allocating Rs2 trillion for job creation and investing in skills development, the government is addressing urgent employment needs while building a strong foundation for future prosperity.
While I appreciate the positive changes made to the personal tax regime., it is unfortunate to see no mention made about the nearly 40 million Indian diaspora who are contributing to India's FX reserves
No more ‘angel tax’
The budget has called for the removal of the' angel tax' across the board, a move India's startup and investment scene will welcome. This was a longstanding demand from the country's vibrant tech, retail, and fintech startup spaces.
Angel tax is levied on capital raised through share issuing by unlisted companies from an Indian investor. It comes into effect if the price of the newly issued shares is viewed as being over and above the fair market value of that company.
"The abolishment of angel tax is going to be a big game-changer, further boosting India’s image as a global startup hub and bringing in a new era of all round economic growth across all key sectors," added Yusuffali MA.
"Additionally, the proposed reduction in customs duties on X-ray tubes and flat panel detectors for domestic X-ray machine production, alongside the exemption of three cancer medicines from customs duty, marks a significant relief for cancer patients nationwide.”
Major Indian cities to be given makeovers
The new budget also aims to give India's cities a much-needed urban makeover by formulating 'enabling policies and market-based mechanisms'. Plus, 14 of the country's largest cities will have the latest in transit systems.
"Mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth along these corridors and consequently boost real estate growth there..." said Anuj Puri, Chairman of the real estate consultancy Anarock Group.
Emphasis on nuclear energy
The private sector will also create adequate nuclear energy capacity, which the FM says will be an integral part of India's energy mix in the future.
According to Pankaj S. Jain, Managing Director of AskPankaj Tax Advisors, "The India Budget 2024-25 is focusing on all the key socio-economic areas - priority is on youth, employment and housing."
Tourism boost
Legacy destinations in Bihar and Orissa were the clear beneficiaries of the budget's focus on tourism development. According to the Financial Minister, the aim was to reinforce India's status as a 'global tourist destination, create jobs, and stimulate investments' in the sector.
Heavy support from private sector
Across multiple initiatives outlined in the Budget 2024-25, the financial minister has mentioned seeking private sector support. Industry sources say this is unprecedented in many ways and provides a clear picture of what the Indian economy needs—that is, more public-private partnerships.
"It's a need of the hour - the private sector will be a key to generating employment, which is the biggest problem faced by the youth in India," said Jitendra Gianchandani, Managing Partner at JGA Consulting.