- The material handling equipment industry is de-licensed and FDI of up to 100 per cent under the automatic route as well as technology collaboration is allowed freely.
Policy initiatives related to infrastructure
- Government of India’s focus on infrastructure development is the biggest driver for the construction equipment industry.
- Projected infrastructure industry spending in the 12th plan is USD 1,011 Billion.
- 100 Smart cities and make India programme projected to boost investment.
Special Economic Zone
- The government has granted sops, including a large number of SEZs to the capital goods industry of which construction equipment is a part, especially with an impetus to increase exports.
Tariffs and Custom and Duties
- The government has remove tariff protection on capital goods.
- Custom duties on a range of goods that are used in the manufacturing process have lowered down.
- Custom duty exemption from MAT under 80IA for infrastructure projects under union budget 15-16. This exemption will help in reducing the cash outflow in the initial years of Project.
- No change in the excise duty on construction equipment in FY15-16.
Encouragement of infrastructure Debt Funds
- The government of India Set up the India infrastructure Finance company (IIFCL) to provide log-term funding for infrastructure projects.
- Interest payments on borrowings for infrastructure are subject to lower withholding tax rate of 5 percent, down from the tax rate of 20 per cent.
- IDF’s income exempt from tax.
- Government cleared model tripartite pact for infra debt funds in ports.
Issue of Tax free Infrastructure bonds
- Infrastructure finance companies like IIFCL, NHAI, Housing urban Development Corp, PFC, IRFC, are allowed to issue tax free bonds.
- Due to this company raised about USD5.5 billion in FY12 and estimated to raised about USD 4.6 billion during FY13.
- HUDCO and REC to raise around USD 1.2 billion in 2014.