Favorable Policies Are Supporting Sector Growth

  • 2018/02/05 18:08:17
Favorable Policies Are Supporting Sector Growth

De-licensing

  • 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.

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